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November 28, 2012 | The American Conservative Just before the Labor Day weekend, a front page New York Times story broke the news of the largest cheating scandal in Harvard University history, in which nearly half the students taking a Government course on the role of Congress had plagiarized or otherwise illegally collaborated on their final exam.  Each year, Harvard admits just 1600 freshmen while almost 125 Harvard students now face possible suspension over this single incident. A Harvard dean described the situation as "unprecedented."
But should we really be so surprised at this behavior among the students at America's most prestigious academic institution? In the last generation or two, the funnel of opportunity in American society has drastically narrowed, with a greater and greater proportion of our financial, media, business, and political elites being drawn from a relatively small number of our leading universities, together with their professional schools. The rise of a Henry Ford, from farm boy mechanic to world business tycoon, seems virtually impossible today, as even America's most successful college dropouts such as Bill Gates and Mark Zuckerberg often turn out to be extremely well-connected former Harvard students. Indeed, the early success of Facebook was largely due to the powerful imprimatur it enjoyed from its exclusive availability first only at Harvard and later restricted to just the Ivy League.
During this period, we have witnessed a huge national decline in well-paid middle class jobs in the manufacturing sector and other sources of employment for those lacking college degrees, with median American wages having been stagnant or declining for the last forty years. Meanwhile, there has been an astonishing concentration of wealth at the top, with America's richest 1 percent now possessing nearly as much net wealth as the bottom 95 percent. 
This situation, sometimes described as a "winner take all society," leaves families desperate to maximize the chances that their children will reach the winners' circle, rather than risk failure and poverty or even merely a spot in the rapidly deteriorating middle class. And the best single means of becoming such an economic winner is to gain admission to a top university, which provides an easy ticket to the wealth of Wall Street or similar venues, whose leading firms increasingly restrict their hiring to graduates of the Ivy League or a tiny handful of other top colleges.  On the other side, finance remains the favored employment choice for Harvard, Yale or Princeton students after the diplomas are handed out. The Battle for Elite College Admissions
As a direct consequence, the war over college admissions has become astonishingly fierce, with many middle- or upper-middle class families investing quantities of time and money that would have seemed unimaginable a generation or more ago, leading to an all-against-all arms race that immiserates the student and exhausts the parents. The absurd parental efforts of an Amy Chua, as recounted in her 2010 bestseller Battle Hymn of the Tiger Mother , were simply a much more extreme version of widespread behavior among her peer-group, which is why her story resonated so deeply among our educated elites. Over the last thirty years, America's test-prep companies have grown from almost nothing into a $5 billion annual industry, allowing the affluent to provide an admissions edge to their less able children. Similarly, the enormous annual tuition of $35,000 charged by elite private schools such as Dalton or Exeter is less for a superior high school education than for the hope of a greatly increased chance to enter the Ivy League. 
Many New York City parents even go to enormous efforts to enroll their children in the best possible pre-Kindergarten program, seeking early placement on the educational conveyer belt which eventually leads to Harvard.  Others cut corners in a more direct fashion, as revealed in the huge SAT cheating rings recently uncovered in affluent New York suburbs, in which students were paid thousands of dollars to take SAT exams for their wealthier but dimmer classmates. 
But given such massive social and economic value now concentrated in a Harvard or Yale degree, the tiny handful of elite admissions gatekeepers enjoy enormous, almost unprecedented power to shape the leadership of our society by allocating their supply of thick envelopes. Even billionaires, media barons, and U.S. Senators may weigh their words and actions more carefully as their children approach college age. And if such power is used to select our future elites in a corrupt manner, perhaps the inevitable result is the selection of corrupt elites, with terrible consequences for America. Thus, the huge Harvard cheating scandal, and perhaps also the endless series of financial, business, and political scandals which have rocked our country over the last decade or more, even while our national economy has stagnated.
Just a few years ago Pulitzer Prize-winning former Wall Street Journal reporter Daniel Golden published The Price of Admission , a devastating account of the corrupt admissions practices at so many of our leading universities, in which every sort of non-academic or financial factor plays a role in privileging the privileged and thereby squeezing out those high-ability, hard-working students who lack any special hook.
In one particularly egregious case, a wealthy New Jersey real estate developer, later sent to Federal prison on political corruption charges, paid Harvard $2.5 million to help ensure admission of his completely under-qualified son.  When we consider that Harvard's existing endowment was then at $15 billion and earning almost $7 million each day in investment earnings, we see that a culture of financial corruption has developed an absurd illogic of its own, in which senior Harvard administrators sell their university's honor for just a few hours worth of its regular annual income, the equivalent of a Harvard instructor raising a grade for a hundred dollars in cash.
An admissions system based on non-academic factors often amounting to institutionalized venality would seem strange or even unthinkable among the top universities of most other advanced nations in Europe or Asia, though such practices are widespread in much of the corrupt Third World. The notion of a wealthy family buying their son his entrance into the Grandes Ecoles of France or the top Japanese universities would be an absurdity, and the academic rectitude of Europe's Nordic or Germanic nations is even more severe, with those far more egalitarian societies anyway tending to deemphasize university rankings.
EliteCommInc., November 28, 2012 at 11:09 am GMT EliteCommInc. November 28, 2012 at 11:21 am GMT
Well, legacy programs are alive and well. According to the read, here's the problem:
"The research certainly supports the widespread perception that non-academic factors play a major role in the process, including athletic ability and "legacy" status. But as we saw earlier, even more significant are racial factors, with black ancestry being worth the equivalent of 310 points, Hispanics gaining 130 points, and Asian students being penalized by 140 points, all relative to white applicants on the 1600 point Math and Reading SAT scale."
These arbitrary point systems while well intended are not a reflection of AA design. School lawyers in a race not be penalized for past practices, implemented their own versions of AA programs. The numbers are easy to challenge because they aren't based on tangible or narrow principles. It's weakneses are almost laughable. Because there redal goal was to thwart any real challenge that institutions were idle in addressing past acts of discrimination. To boost their diversity issues, asians were heavily recruited. Since AA has been in place a lot of faulty measures were egaged in: Quotas for quotas sake. Good for PR, lousy for AA and issues it was designed to address.
I think the statistical data hides a very important factor and practice. Most jews in this country are white as such , and as such only needed to change their names and hide behaviors as a strategy of surviving the entrance gauntlet. That segregation created a black collegiate system with it's own set of elite qualifiers demonstrates that this model isn't limited to the Ivy league.
That an elite system is devised and practiced in members of a certain club networks so as to maintain their elite status, networks and control, this is a human practice. And it once served as something to achieve. It was thought that the avenues of becoming an elite were there if one wanted to strive for it. Hard work, honesty, persistence, results . . . should yield X.
And while I am not as focused on the poverty ve wealth dynamic. this century has revealed something very disappointing that you address. That the elites have done a very poor job of leading the ship of state, while still remaining in leadership belies such a bold hypocrisy in accountability, it's jarring. The article could actually be titled: "The Myth of the Best and the Brightest."
I don't think it's just some vindictive intent. and while Americans have always known and to an extent accepted that for upper income citizens, normal was not the same as normal on the street. Fairness, was not the same jn practice nor sentiment. What may becoming increasing intolerant has been the obvious lack of accountability among elites. TARP looked like the elites looking out for each other as opposed the ship of state. I have read three books on the financials and they do not paint a pretty portrait of Ivy League leadership as to ethics, cheating, lying, covering up, and shamelessly passing the buck. I will be reading this again I am sure.
It's sad to think that we may be seeing te passing of an era. in which one aspired to be an elite not soley for their wealth, but the model they provided od leadership real or imagined. Perhaps, it passed long ago, and we are all not just noticing.
I appreciated you conclusions, not sure that I am comfortable with some of the solutions.Russell Seitz November 28, 2012 at 1:51 pm GMT
Since I still hanker to be an elite in some manner, It is interesting to note my rather subdued response to the cheating. Sadly, this too may be an open secret of standard fair - and that is very very sad. And disappointing. Angering even.Sean Gillhoolley November 28, 2012 at 3:06 pm GMT
The shifting social demography of deans, house masters and admissions committees may be a more important metric than the composition of the student body, as it determines the shape of the curriculum, and the underlying culture of the university as a legacy in itself.
If Ron harrows the literary journals of the Jackson era with equal diligence. he may well turn up an essay or two expressing deep shock at Unitarians admitting too many of the Lord's preterite sheep to Harvard, or lamenting the rise of Methodism at Yale and the College of New Jersey.Rob in CT November 28, 2012 at 4:05 pm GMT
Harvard is a university, much like Princeton and Yale, that continues based on its reputation, something that was earned in the past. When the present catches up to them people will regard them as nepotistic cauldrons of corruption.
Look at the financial disaster that befell the USA and much of the globe back in 2008. Its genesis can be found in the clever minds of those coming out of their business schools (and, oddly enough, their Physics programs as well).
They are teaching the elite how to drain all value from American companies, as the rich plan their move to China, the new land of opportunity. When 1% of the population controls such a huge portion of the wealth, patriotism becomes a loadstone to them. The elite are global. Places like Harvard cater to them, help train them to rule the world .but first they must remake it. Replies: @Part White, Part Native I agree, common people would never think of derivatives , nor make loans based on speculationBryan November 28, 2012 at 5:12 pm GMT
First, I appreciated the length and depth of your article.
Having said that, to boil it down to its essence:
Subconcious bias/groupthink + affirmative action/diversity focus + corruption + innumeracy = student bodies at elite institutions that are wildly skewed vis-a-vis both: 1) the ethnic makeup of the general population; and 2) the makeup of our top-performing students.
Since these institutions are pipelines to power, this matters.
I rather doubt that wage stagnation (which appears to have begun in ~1970) can be pinned on this that part stuck out, because there are far more plausible causes. To the extent you're merely arguing that our elite failed to counter the trend, ok, but I'm not sure a "better" elite would have either. The trend, after all, favored the elite.
Anyway, I find your case is plausible.
Your inner/outer circle hybrid option is interesting. One (perhaps minor) thing jumps out at me: kids talk. The innies are going to figure out who they are and who the outies are. The outies might have their arrogance tempered, but the innies? I suspect they'd be even *more* arrogant than such folks are now (all the more so because they'd have better justification for their arrogance), but I could be wrong.
Perhaps more significantly, this:
But if it were explicitly known that the vast majority of Harvard students had merely been winners in the application lottery, top businesses would begin to cast a much wider net in their employment outreach, and while the average Harvard student would probably be academically stronger than the average graduate of a state college, the gap would no longer be seen as so enormous, with individuals being judged more on their own merits and actual achievements
Is a very good reason for Harvard, et al. to resist the idea. I think you're right that this would be a good thing for the country, but it would be bad for Harvard. I think the odds of convincing Harvard to do it out of the goodness of their administrators hearts is unlikely. You are basically asking them to purposefully damage their brand.
All in all, I think you're on to something here. I have my quibbles (the wage stagnation thing, and the graph with Chinese vs USA per capita growth come on, apples and oranges there!), but overall I think I agree that your proposal is likely superior to the status quo.Anonymous November 28, 2012 at 5:33 pm GMT
Don't forget the mess one finds after they ARE admitted to these schools. I dropped out of Columbia University in 2010.
You can "make it" on an Ivy-league campus if you are a conservative-Republican-type with all the rich country-club connections that liberals use to stereotype.
Or you can succeed if you are a poor or working-class type who is willing to toe the Affirmative Action party line and be a good "progressive" Democrat (Obama stickers, "Gay Pride" celebrations, etc.)
If you come from a poor or working-class background and are religious, or culturally conservative or libertarian in any way, you might as well save your time and money. You're not welcome, period. And if you're a military veteran you WILL be actively persecuted, no matter what the news reports claim.
It sucks. Getting accepted to Columbia was a dream come true for me. The reality broke my heart.Scott McConnell November 28, 2012 at 5:39 pm GMT
Regarding the overrepresentation of Jewish students compared to their actual academic merit, I think the author overstates the role bias (subjective, or otherwise) plays in this:
1) , a likely explanation is that Jewish applicants are a step ahead in knowing how to "play the admissions game." They therefore constitute a good percentage of applicants that admission committees view as "the total package." (at least a higher percentage than scores alone would yield). Obviously money and connections plays a role in them knowing to say precisely what adcoms want to hear, but in any case, at the end of the day, if adcoms are looking for applicants with >1400 SATs, "meaningful" life experiences/accomplishments, and a personal statement that can weave it all together into a compelling narrative, the middle-upper-class east coast Jewish applicant probably constitutes a good percentage of such "total package" applicants. I will concede however that this explanation only works in explaining the prevalence of jews vs. whites in general. With respect to Asians, however, since they are likely being actively and purposefully discriminated against by adcoms, having the "complete package" would be less helpful to them.
2) Another factor is that, regardless of ethnicity, alumni children get a boost and since in the previous generation Jewish applicants were the highest achieving academic group, many of these lesser qualified jews admitted are children of alumni.
3) That ivy colleges care more about strong verbal scores than mathematics (i.e., they prefer 800V 700M over 700V 800M), and Jewish applicants make up a higher proportion of the high verbal score breakdowns.
4) Last, and perhaps more importantly we do not really know the extent of Jewish representation compared to their academic merit. Unlike admitted Asian applicants, who we know, on average, score higher than white applicants, we have no similar numbers of Jewish applicants. The PSAT numbers are helpful, but hardly dispositive considering those aren't the scores colleges use in making their decision information.HAR November 28, 2012 at 6:10 pm GMT
@Bryan Getting accepted to Columbia was a dream come true for me. The reality broke my heart.
I'm touched by this. I've spent tons of time at Columbia, a generation ago -- and my background fit fine -- the kind of WASP background Jews found exotic and interesting. But I can see your point, sad to say. There are other great schools -- Fordham, where my wife went to law school at night, has incredible esprit de corps - and probably, person for person, has as many lawyers doing good and interesting work as Columbia.KXB November 28, 2012 at 6:18 pm GMT
"There are other great schoolsFordham, where my wife went to law school at night, has incredible esprit de corps - and probably, person for person, has as many lawyers doing good and interesting work as Columbia."
Someone doesn't know much about the legal market.Anonymous November 28, 2012 at 6:39 pm GMT
"Tiffany was also rejected by all her other prestigious college choices, including Yale, Penn, Duke, and Wellsley, an outcome which greatly surprised and disappointed her immigrant father.88″
In the fall of 1990, my parents had me apply to 10 colleges. I had the profile of many Indian kids at the time ranked in the top 10 of the class, editor of school paper, Boy Scouts. SAT scores could have been better, but still strong. Over 700 in all achievement tests save Bio, which was 670.
Rejected by 5 schools, waitlisted by 3, accepted into 2 one of them the state univ.
One of my classmates, whose family was from Thailand, wound up in the same predicament as me. His response, "Basketball was designed to keep the Asian man down."
The one black kid in our group got into MIT, dropped out after one year because he could not hack it. The kid from our school who should have gone, from an Italian-American family, and among the few who did not embrace the guido culture, went to Rennsealer instead, and had professional success after.a November 28, 2012 at 6:43 pm GMT
As a University of Chicago alum, I infer that by avoiding the label "elite" on such a nifty chart we can be accurately categorized as "meritocratic" by The American Conservative.
Then again, this article doesn't even purport to ask why elite universities might be in the business of EDUCATING a wider population of students, or how that education takes place.
Perhaps, by ensuring that "the best" students are not concentrated in only 8 universities is why the depth and quality of America's education system remains the envy of the world.Weighty Commentary November 28, 2012 at 6:43 pm GMT
In my high school, there were roughly 15 of us who had been advanced two years ahead in math. Of those, 10 were Jewish; only two of them had a 'Jewish' last name. In my graduate school class, half (7) are Jewish. None has a 'Jewish' last name. So I'm pretty dubious of the counting method that you use.
Also, it's clear that there are Asian quotas at these schools, but it's not clear that Intel Science Fairs, etc, are the best way to estimate what level of talent Asians have relative to other groups.
I was curious so I google High School Poetry Competition, High School Constitution Competition, High School Debating Competition. None of the winners here seem to have an especially high Asian quotient. So maybe a non-technical (liberal arts) university would settle on ~25-30% instead of ~40% asian? And perhaps a (small) part of the problem is a preponderance of Asian applicants excelling in technical fields, leading to competition against each other rather than the general population? Just wonderin'Adam November 28, 2012 at 6:49 pm GMT
Regarding the declining Jewish achievement, it looks like it can be primarily explained through demographics: "Intermarriage rates have risen from roughly 6% in 1950 to approximately 4050% in the year 2000. This, in combination with the comparatively low birthrate in the Jewish community, has led to a 5% decline in the Jewish population of the United States in the 1990s."
Jewish surnames don't mean what they used to. And intermarriage rates are lowest among the low-performing and highly prolific Orthodox.
Jewish birth rates have been falling faster than the white population, especially for the non-Orthodox:
"In contrast to the ongoing trends of assimilation, some communities within American Jewry, such as Orthodox Jews, have significantly higher birth rates and lower intermarriage rates, and are growing rapidly. The proportion of Jewish synagogue members who were Orthodox rose from 11% in 1971 to 21% in 2000, while the overall Jewish community declined in number.  In 2000, there were 360,000 so-called "ultra-orthodox" (Haredi) Jews in USA (7.2%). The figure for 2006 is estimated at 468,000 (9.4%)."
"a very low fertility rate of 1.9, of which 1.4 will be raised as Jews (2.15 is replacement rate)"
"As against the overall average of 1.86 children per Jewish woman, an informed estimate gives figures ranging upward from 3.3 children in "modern Orthodox" families to 6.6 in Haredi or "ultra-Orthodox" families to a whopping 7.9 in families of Hasidim."
These statistics would suggest that half or more of Jewish children are being born into these lower-performing groups. Given their very low intermarriage rates, a huge portion of the secular, Reform, and Conservative Jews must be intermarrying (more than half if the aggregate 43% intermarriage figure is right). And the high-performing groups may now be around 1 child per woman or lower, and worse for the youngest generation.
So a collapse in Jewish representation in youth science prizes can be mostly explained by the collapse of the distinct non-Orthodox Jewish youth.
Incidentally, intermarriage also produces people with Jewish ancestry who get classified as gentiles using last names or self-identification, reducing Jewish-gentile gaps by bringing up nominal gentile scores at the same time as nominal-Jewish scores are lowered.Bryan November 28, 2012 at 6:50 pm GMT
The center of power in this country being located in the Northeast is nothing new. Whether it be in it's Ivy League schools or the ownership of natural resources located in other regions, particularly the South, the Northeast has always had a disproportionate share of influence in the power structures, particularly political and financial, of this nation. This is one of the reasons the definition of "white" when reviewing ethnicity is so laughably inaccurate. There is a huge difference in opportunity between WASP or Jewish in the Northeast, for instance, and those of Scots Irish ancestory in the mountain south. Hopefully statistical analysis such as this can break open that stranglehold, especially as it is directly impacting a minority group in a negative fashion. Doing this exercise using say, white Baptists compared to other white subgroups, while maybe equally valid in the results, would be seen as racist by the very Ivy League system that is essentially practicing a form of racism.Anonymous November 28, 2012 at 8:44 pm GMT
Scott, thanks for your words of commiseration.
Yeah, my ultimate goal was to attend law school, and a big part of the heartbreak for meor heartburn, the more cynical would call itwas seeing how skewed and absurd the admissions process to law school is.
I have no doubt that I could have eventually entered into a "top tier" law school, and that was a dream of mine also. I met with admissions officers from Duke, Harvard, Stanford, Fordham, etc. I was encouraged. I had the grades and background for it.
Butand I'm really not trying to sound corny 0r self-important herewhat does it profit a man to gain the world and lose his soul? I really don't feel that I'm exaggerating when I say that that's exactly how it felt to me.
The best experience I had while In New York was working as an after-school programs administrator for P.S. 136, but that was only because of the kids. They'll be old and bitter and cynical soon enough.
At one point it occurred to me that I should have just started claiming "Black" as my ethnicity when I first started attending college as an adult. I never attended high-school so it couldn't have been disproved. I'm part Sicilian so I could pass for 1/4 African-American. Then I would have received the preference toward admission that, say, Michael Jordan's kids or Barack Obama's kids will receive when they claim their Ivy-league diplomas. I should have hid the "white privilege" I've enjoyed as the son of a fisherman and a waitress from one of the most economically-depressed states in America.
The bottom line is that those colleges are political brainwashing centers for a country I no longer believe in. I arrived on campus in 2009 and I'm not joking at all when I say I was actively persecuted for being a veteran and a conservative who was not drinking the Obama Kool-aid. Some big fat African-American lady, a back-room "administrator" for Columbia, straight-up threw my VA benefits certification in the garbage, so my money got delayed by almost two months. I had no idea what was going on. I had a wife and children to support.
The fact that technology has enabled us to sit here in real-time and correspond back-and-forth about the state of things doesn't really change the state of things. They are irredeemable. This country is broke and broken.
If Abraham Lincoln were born today in America he would wind up like "Uncle Teardrop" from Winter's Bone. Back then, in order to be an attorney, you simply studied law and starting trying cases. If you were good at it then you were accepted and became a lawyer. Today, something has been lost. There is no fixing it. I don't want to waste my time trying to help by being "productive" to the new tower of Babel or pretending to contribute.TM says: Website November 28, 2012 at 9:51 pm GMT
Perhaps only one thing you left out, which is especially important with regard to Jewish enrollment and applications at Ivy leagues, and other schools as well.
Jewish high school graduates actively look out for campuses with large Jewish populations, where they feel more comfortable.
I don't know the figures, but I believe Dartmouth, for example, has a much smaller Jewish population than Columbia, and it will stay that way because of a positive feedback loop. (i.e. Jews would rather be at Columbia than Dartmouth, or sometimes even rather be at NYU than Dartmouth). This explains some of the difference among different schools (and not solely better admission standards).
This is also especially relevant to your random lottery idea, which will inevitably lead to certain schools being overwhelmingly Asian, others being overwhelmingly Jewish, etc., because the percentage of applicants from every ethnicity is different in every school. This will necessarily eliminate any diversity which may or may not have existed until now.Luke Lea November 28, 2012 at 10:04 pm GMT
I like the lottery admissions idea a lot but the real remedy for the US education system would be to abandon the absurd elite cult altogether. There is not a shred of evidence that graduates of so-called elite institutions make good leaders. Many of them are responsible for the economic crash and some of them have brought us the disaster of the Bush presidency.
Many better functioning countries Germany, the Scandinavians do not have elite higher education systems. When I enrolled to University in Germany, I showed up at the enrollment office the summer before the academic year started, filled out a form (1), and provided a certified copy of my Abitur certificate proving that I was academically competent to attend University. I never wasted a minute on any of the admissions games that American middle class teenagers and their parents are subjected to. It would surely have hurt my sense of dignity to be forced to jump through all these absurd and arbitrary hoops.
Americans, due to their ignorance of everything happening outside their borders, have no clue that a system in which a person is judged by what "school" they attended is everything but normal. It is part of the reason for American dysfunction.Jack November 28, 2012 at 10:07 pm GMT
Since they are the pool from which tomorrow's governing elites will be chosen, I'd much rather see Ivy League student bodies which reflected the full ethnic and geographic diversity of the US. Right now rural and small town Americans and those of Catholic and Protestant descent who live in the South and Mid-West - roughly half the population - are woefully under-represented, which explains why their economic interests have been neglected over the last forty years. We live in a multi-cultural, multi-ethnic representative democracy and our policy-making elites must reflect that diversity. Else the country will come apart.
Thus I recommend 'affirmative action for all' in our elite liberal arts colleges and universities (though not our technical schools). Student bodies should be represent 'the best and the brightest' of every ethnic group and geographical area of the country. Then the old school ties will truly knit our society together in a way that is simply not happening today.
A side benefit - and I mean this seriously - is that our second and third tier colleges and universities would be improved by an influx of Asian and Ashkenazi students (even though the very best would still go to Harvard).Pat Boyle November 28, 2012 at 10:30 pm GMT
I believe that this article raises and then inappropriately immediately dismisses the simplest and most likely reason for the over-representation of Jewish students at Ivy League Schools in the face of their declining bulk academic performance:
They apply to those schools in vastly disproportionate numbers.
Without actual data on the ethnicity of the applicants to these and other schools, we simply cannot rule out this simple and likely explanation.
It is quite clear that a large current of Jewish American culture places a great emphasis on elite college attendance, and among elite colleges, specifically values the Ivy League and its particular cache as opposed to other elite institutions such as MIT. Also, elite Jewish American culture, moreso than elite Asian American culture, encourages children to go far away from home for college, considering such a thing almost a right of passage, while other ethnic groups tend to encourage children to remain closer. A high performing Asian student from, say, California, is much more likely to face familial pressure to stay close to home for undergrad (Berkeley, UCLA, etc) than a high performing Jewish student from the same high school, who will likely be encouraged by his or her family to apply to many universities "back east".
Without being able to systematically compare with real data the ethnicities of the applicants to those offered admission, these conclusions simply cannot be accepted.Anonymous November 28, 2012 at 11:06 pm GMT
Different expectations for different races should worry traditional Americans.
If we become comfortable with different academic standards for Asians will we soon be expected to apply different laws to them also? Will we apply different laws or at least different interpretations of the same laws to blacks?
The association of East Asians with CalTech is now as strong as the association of blacks with violent crime. Can not race conscious jurisprudence be far behind?
Around a millenium ago in England it mattered to the court if you were a commoner or a noble. Nobles could exercise 'high justice' with impunity. They were held to different standards. Their testimony counted for more in court. The law was class concious.
Then we had centuries of reform. We had 'Common Law'. By the time of our revolution the idea that all were equal before the law was a very American kind of idea. We were proud that unlike England we did not have a class system.
Today we seem to be on the threshold of a similar sytem of privileges and rights based on race. Let me give an example. If there were a domestic riot of somekind and a breakdown of public order, the authorities might very well impose a cufew. That makes good sense for black male teens but makes little or no sense for elderly Chinese women. I can envision a time when we have race specific policies for curfews and similar measures.
It seems to be starting in schools. It could be that the idea of equality before the law was an idea that only flourished between the fifteenth century and the twenty first.Kelly November 28, 2012 at 11:15 pm GMT
"But filling out a few very simple forms and having their test scores and grades scores automatically forwarded to a list of possible universities would give them at least the same chance in the lottery as any other applicant whose academic skills were adequate."
They get a lot of applications. I am guessing they chuck about 1/2 or more due to the application being incomplete, the applicant did not follow instructions, the application was sloppy, or just obviously poor grades/test scores. The interview and perhaps the essay and recommendations are necessary to chuck weirdos and psychopaths you do not want sitting next to King Fahd Jr. So the "byzantine" application process is actually necessary to reduce the number of applicants to be evaluated.Anonymous November 28, 2012 at 11:31 pm GMT
I have a friend who went to Stanford with me in the early 80s. She has two sons who recently applied to Stanford. The older son had slightly better grades and test scores. The younger son is gay. Guess which one got in?FN November 28, 2012 at 11:44 pm GMT
If you were in Columbia's GS school, (or even if you were CC/SEAS/Barnard) you ought to reach out to some of on-campus and alumni veteran's groups. They can help you maneuver through the school. (I know there's one that meets at a cafe on 122 and Broadway) CU can be a lonely and forbidding place for anyone and that goes double for GSers and quadruple for veterans.
You ought to give it another go. Especially if you aren't going somewhere else that's better. Reach out to your deans and make a fuss. No one in the bureaucracy wants to help but you can force them to their job.Ben K November 29, 2012 at 12:24 am GMT
Mr. Unz, the issues of jewish/gentile intermarriage and the significance of jewish-looking names do indeed merit more consideration than they were given in this otherwise very enlightening article.
What would the percentage of jews in Ivy-League universities look like if the methodology used to determine the percentage of jewish NMS semifinalists were applied to the list of Ivy League students (or some available approximation of it)?Anonymous November 29, 2012 at 12:28 am GMT
For background: I'm an Asian-American who worked briefly in legacy admissions at an Ivy and another non-Ivy top-tier, both while in school (work-study) and as an alum on related committees.
Mendy Finkel's observations are spot on. Re: her 1st point, personal "presentation" or "branding" is often overlooked by Asian applicants. An admission officer at another Ivy joked they drew straws to assign "Night of a 1000 Lee's", so accomplished-but-indistinguishable was that group.
A few points on the Asian analysis:
1. I think this analysis would benefit from expanding beyond HYP/Ivies when considering the broader meritocracy issue. Many Asians esteem technical-leaning schools over academically-comparable liberal arts ones, even if the student isn't a science major. When I was in college in the 90′s, most Asian parents would favor a Carnegie Mellon or Hopkins over Brown, Columbia or Dartmouth (though HYP, of course, had its magnetic appeal). The enrollment percentages reflect this, and while some of this is changing, this is a fairly persistent pattern.
2. Fundraising is crucial. The Harvard Class of '77 example isn't the most telling kind of number. In my experience, Jewish alumni provide a critical mass in both the day-to-day fundraising and the resultant dollars. And they play a key role, both as givers and getters, in the signature capital campaign commitments (univ hospitals, research centers, etc.). This isn't unique to Jewish Ivy alumni; Catholic alumni of ND or Georgetown provide similar support. But it isn't clear what the future overall Asian commitment to the Ivy "culture of fundraising" will be, which will continue to be a net negative in admissions.
Sidenote: While Asians greatly value the particular civic good, they are uneasy with it being so hinged to an opaque private sector, in this case, philanthropy. That distinction, blown out a bit, speaks to some of the Republican "Asian gap".
3. I would not place too much weight on NMS comparisons between Asians and Jews. In my experience, most Asians treat the PSAT seriously, but many established Jews do not the potential scholarship money isn't a factor, "NMS semifinalist" isn't an admissions distinction, and as Mendy highlighted, colleges don't see the scores.
On a different note, while the "weight" of an Ivy degree is significant, it's prestige is largely concentrated in the Northeast and among some overseas. In terms of facilitating access and mobility, a USC degree might serve you better in SoCal, as would an SMU one in TX.
And like J Harlan, I also hope the recent monopoly of Harvard and Yale grads in the presidency will end. No doubt, places like Whittier College, Southwest Texas State Teachers' College, and Eureka College gave earlier presidents valuable perspectives and experience that informed their governing.
But thank you, Ron, for a great provocative piece. Very well worth the read.M_Young November 29, 2012 at 1:46 am GMT
Hey Ron, your next article should be on the military academies, and all those legacies that go back to the Revolutionary War. How do you get into the French military academy, and do the cadets trace their family history back to the soldiers of Napoleon or Charles Martel or whatever?Anonymous November 29, 2012 at 4:04 am GMT
"Thus, there appears to be no evidence for racial bias against Asians, even excluding the race-neutral impact of athletic recruitment, legacy admissions, and geographical diversity."
Yes, at UCLA, at least up to 2004, Asian and white admits had nearly identical SATs and GPAs.
Further, it just isn't the case that Asians are so spectacular as people seem to think. Their average on the SAT Verbal is slightly less than whites, their average on SAT Writing is slightly more. Only in math do they have a significant advantage, 59 points or .59 standard deviation. Total advantage is about .2 over the three tests. Assuming that Harvard or Yale admit students at +3 standard deviations overall, and plugging the relative group quantiles +(3, 2.8) into a normal distribution, we get that .14% of white kids would get admitted, versus .26% of Asian kids. Or, 1.85 Asian kids for every one white kid.
But, last year 4.25 times as many whites as Asians took the SAT, so there still should be about 2.28 times as many white kids being admitted as Asians (4.25/1.85).
On GPA, whites and Asians are also pretty similar on average, 3.52 for Asians who took the SAT, 3.45 for whites who took the SAT. So that shouldn't be much of a factor.Todd November 29, 2012 at 5:49 am GMT
I am a Cadet at the US Military Academy at West Point and generally pretty familiar with trans-national Academy admissions processes. There's an excellent comparative study of worldwide military academy admissions that was done in the late '90′s you might find interesting (IIRC it was done by a group in the NATO Defence College) and I think you will find that although soldiers are often proud of their family histories to a fault, it is not what controls entrance to the officer corps in most countries.
"Legacy" is definitely meaningless in US Military Academy admissions, although can be very helpful in the separate process of securing a political appointment to attend the Academy once accepted for admission and in an Army career. West Point is not comparable to the Ivy League schools in the country, because (ironically) the admissions department that makes those comparisons lets in an inordinate number of unqualified candidates and ensures our student body includes a wide range of candidates, from people who are unquestionably "Ivy League material" to those who don't have the intellect to hack it at any "elite" institution.
Prior the changes in admissions policies and JFK ordering an doubling of the size of the Corps of Cadets in the '60′s, we didn't have this problem. But, I digress. My point is, the Academy admissions system is very meritocratic.Interesting November 29, 2012 at 7:02 am GMT
Thank you for the great article.
I am a Jewish alum of UPenn, and graduated in the late 90s. That puts me almost a generation ago, which may be before the supposed Jewish decline you write about. I was in an 80%+ Jewish fraternity, and at least 2/3 of my overall network of friends at Penn was also Jewish. As was mentioned earlier, I have serious qualms with your methods for counting Jews based upon last name.
Based upon my admittedly non-scientific sample, the percentage of us who had traditionally Jewish last names was well under half and closer to 25%. My own last name is German, and you would never know I am Jewish based solely upon my name (nor would you based upon the surname of 3/4 of my grandparents, despite my family being 100% Jewish with no intermarriages until my sister).
By contrast, Asians are much easier to identify based upon name. You may overcount certain names like Lee that are also Caucasian, but it is highly unlikely that you will miss any Asian students when your criterion is last name.
Admittedly I skimmed parts of the article, but were other criterion used to more accurately identify the groups?A Jew November 29, 2012 at 7:44 am GMT
The Jewish presence is definitely understated by just looking at surnames. As is the American Indian.
My maternal grandfather was Ashkenazi and his wife was 1/2 Ashkenazi and 1/4 Apache. He changed his name to a Scots surname that matched his red hair so as to get ahead as a business man in 20s due to KKK and anti-German feelings at the time. Their kids had two PHDs and a Masters between them despite their parents running a very blue collar firm.
My surname comes from my dad and its a Scottish surname although he was 1/4 Cherokee. On that side we are members of the FF of Virignia. Altogether I am more Jewish and American Indian than anything else yet would be classified as white. I could easily claim to be
Jewish or Indian on admissions forms. I always selected white. I was NMSF.
Both my sister and I have kids. Her husband is a full blood Indian with a common English surname. One of my nieces made NMSF and another might. My sisters kids do not think of themselves as any race and check other.
My wife is 1/4 Indian and 3/4 English. My kids are young yet one has tested to an IQ in the 150s.
Once you get West of the Appalachians, there are a lot of mutts in the non-gentile whites. A lot of Jews and American Indians Anglicized themselves a generation or two ago and they are lumped into that group as well as occupy the top percentile academically.Leon November 29, 2012 at 10:24 am GMT
Interesting article with parts I would agree with but also tinged with bias and conclusions that I would argue are not fully supported by the data.
I think more analysis is needed to confirm your conclusions. As others have mentioned there may be problems with your analysis of NMS scores. I think graduate admissions and achievements especially in the math and sciences would be a better measure of intellectual performance.
Now, I didn't attend an Ivy League school, instead a public university, mainly because I couldn't afford it or so I thought. I was also a NMS finalist.
But I always was of the opinion that except for the most exceptional students admission to the Ivies was based on the wealth of your family and as you mentioned there are quite a few affluent Jews so I imagine they do have a leg up. Harvard's endowment isn't as large as it is by accident.
It is interesting that you didn't discuss the stats for Stanford.
Lastly, I think your solution is wrong. The pure meritocracy is the only fair solution. Admissions should be based upon the entrance exams like in Asia and Europe.
There are plenty of options for those who don't want to compete and if the Asians dominate admissions at the top schools so be it.
Hopefully, all of this will be mute point n a few years as online education options become more popular with Universities specializing in graduate education and research.Weighty Commentary November 29, 2012 at 12:03 pm GMT
Ron Unz on Asians (ie Asian Americans): "many of them impoverished immigrant families"
Why do you twice repeat this assertion. Asians are the wealthiest race and most of the wealthiest ethnic groups tracked by the Census Bureau, which includes immigrants.
A potentially bigger issue completely ignored by your article is how do colleges differentiate between 'foreign' students (overwhelmingly Asian) and American students. Many students being counted as "Asian American" are in reality wealthy and elite foreign "parachute kids" (an Asian term), dropped onto the generous American education system or into boarding schools to study for US entrance exams, qualify for resident tuition rates and scholarships, and to compete for "American" admissions slots, not for the usually limited 'foreign' admission slots.
Probably people from non-Asian countries are pulling the same stunt, but it seems likely dominated by Asians. And expect many more with the passage of the various "Dream Acts"
So American kids must compete with the offspring of all the worlds corrupt elite for what should be opportunities for US Americans.
New York PSAT data:
In New York Asian-Americans make up 9.5%, whites 50.4%, Latinos 18.3% and African-Americans 15.7%.
California PSAT data:
In California Asian-Americans make up 19.7% of PSAT takers, and whites make up 31.9%, with 37% Latino and 5.7% African-American.Anonymous November 29, 2012 at 2:01 pm GMT nooffensebut says: Website Show Comment Next New Comment November 29, 2012 at 2:20 pm GMT
Am I the only one that finds the comparison of Asians (a race) to Jews (a religion) as basis for a case of discrimination completely flawed? I got in at Harvard and don't remember them even asking me what my religion was.
The value of diversity is absolutely key. I have a bunch of very good Asian friends and I love them dearly, but I don't believe a place like CalTech with its 40% demographics cannot truly claim to be a diverse place any more.Anonymous November 29, 2012 at 2:44 pm GMT
Regarding the SAT, we do know more than just differences of averages between whites and Asians. We have some years of score distributions . As recently as 1992, 1.2% of whites and 5.1% of Asians scored between 750 and 800 on the math subtest. As recently as 1985, 0.20% of whites and 0.26% of Asians scored in that range on the verbal/critical reading subtest.
On a different form of the writing subtest than is currently used, 5.0% of whites and 3.0% of Asians scored greater than 60 in 1985. We also know that, as the white-Asian average verbal/critical reading gap shrank to almost nothing and the average math gap grew in Asians' favor, the standard deviations on both for Asians have been much higher than every other group but have stayed relatively unchanged and have become, in fact, slightly lower than in 1985.
Therefore, Asians probably greatly increased their share of top performers.Rob Schacter November 29, 2012 at 3:37 pm GMT
@Milton F.: "Perhaps, by ensuring that "the best" students are not concentrated in only 8 universities is why the depth and quality of America's education system remains the envy of the world."
Hardly. America's education system is "the envy" because of the ability for minorities to get placement into better schools, not solely for the education they receive. Only a very select few institutions are envied for their education primarily, 90% of the colleges and universities across the country are sub-standard education providers, same with high schools.
I would imagine you're an educator at some level, more than likely, at one of the sub-standard colleges or even perhaps a high school teacher. You're attempting to be defensive of the American education system, when in reality, you're looking at the world through rose colored glasses. Working from within the system, rather than from the private sector looking back, gives you extreme tunnel vision. That, coupled with the average "closed mindedness" of educators in America is a dangerous approach to advancing the structure of the American education system. You and those like you ARE the problem and should be taken out of the equation as quickly as possible. Please retire ASAP or find another career.Anonymous says: Website Show Comment Next New Comment November 29, 2012 at 5:41 pm GMT
Aside from the complete lack of actual ivy league admission data on jewish applicants, a big problem with unz's "jewish affirmative action" claim is how difficult such a policy would be to carry out in complete secrecy.
Now, it would be one thing if Unz was claiming that jews are being admitted with similar numbers to non-jewish whites, but in close cases, admissions staff tend to favor jewish applicants. But he goes much further than that. Unz is claiming that jews, as a group, are being admitted with lower SAT scores than non-jewish whites. Not only that, but this policy is being carried out by virtually every single ivy league college and it has been going on for years. Moreover, this preference is so pervasive, that it allows jews to gain admissions at many times the rate that merit alone would yield, ultimately resulting in entering classes that are over 20% Jewish.
If a preference this deep, consistent and widespread indeed exists, there is no way it could be the result of subjective bias or intentional tribal favoritism on the part of individual decision makers. It would have to be an official, yet unstated, admissions policy in every ivy league school. Over the years, dozens (if not hundreds) of admission staff across the various ivy league colleges would be engaging in this policy, without a single peep ever leaking through about Jewish applicants getting in with subpar SAT scores. We hear insider reports all the time about one group is favored or discriminated against (we even have such an insider account in this comment thread), but we hear nothing about the largest admission preference of them all.
Remember, admissions staffs usually include other ethnic minorities. I couldn't imagine them not wondering why jews need to be given such a big boost so that they make up almost a quarter of the entering class. Even if every member of every admissions committee were Jewish liberals, it would still be almost impossible to keep this under wraps.
Obviously, I have never seen actual admission numbers for Jewish applicants, so I could be wrong, and there could in fact be an unbreakable wall of secrecy regarding the largest and most pervasive affirmative action practice in the country. Or, perhaps, the ivy league application pool contains a disproportionate amount of high scoring jewish applicants.Julia November 29, 2012 at 6:13 pm GMT
As some who is Jewish from the former Soviet Union, and who was denied even to take an entrance exam to a Moscow college, I am saddened to see that American educational admission process looks more and more "Soviet" nowadays. Kids are denied opportunities because of their ethnic or social background, in a supposedly free and fair country!
But this is just a tip of the iceberg. The American groupthink of political correctness, lowest common denominator, and political posturing toward various political/ethnic/religious/sexual orientation groups is rotting this country inside out.
Worse things are yet to come.Ben K November 29, 2012 at 6:43 pm GMT
"Similarly, Jews were over one-quarter of the top students in the Physics Olympiad from 1986 to 1997, but have fallen to just 5 percent over the last decade, a result which must surely send Richard Feynman spinning in his grave."
Actually, Richard Feynman famously rejected genetic explanations of Jewish achievement (whether he was right or wrong to do so is another story), and aggressively resisted any attempts to list him as a "Jewish scientist" or "Jewish Nobel Prize winner." I am sure he would not cared in the slightest bit how many Jews were participating in the Physics Olympiad, as long as the quality of the students' work continued to be excellent. Here is a letter he wrote to a woman seeking to include him in a book about Jewish achievement in the sciences.
Dear Miss Levitan:
In your letter you express the theory that people of Jewish origin have inherited their valuable hereditary elements from their people. It is quite certain that many things are inherited but it is evil and dangerous to maintain, in these days of little knowledge of these matters, that there is a true Jewish race or specific Jewish hereditary character. Many races as well as cultural influences of men of all kinds have mixed into any man. To select, for approbation the peculiar elements that come from some supposedly Jewish heredity is to open the door to all kinds of nonsense on racial theory.
Such theoretical views were used by Hitler. Surely you cannot maintain on the one hand that certain valuable elements can be inherited from the "Jewish people," and deny that other elements which other people may find annoying or worse are not inherited by these same "people." Nor could you then deny that elements that others would consider valuable could be the main virtue of an "Aryan" inheritance.
It is the lesson of the last war not to think of people as having special inherited attributes simply because they are born from particular parents, but to try to teach these "valuable" elements to all men because all men can learn, no matter what their race.
It is the combination of characteristics of the culture of any father and his father plus the learning and ideas and influences of people of all races and backgrounds which make me what I am, good or bad. I appreciate the valuable (and the negative) elements of my background but I feel it to be bad taste and an insult to other peoples to call attention in any direct way to that one element in my composition.
At almost thirteen I dropped out of Sunday school just before confirmation because of differences in religious views but mainly because I suddenly saw that the picture of Jewish history that we were learning, of a marvelous and talented people surrounded by dull and evil strangers was far from the truth. The error of anti-Semitism is not that the Jews are not really bad after all, but that evil, stupidity and grossness is not a monopoly of the Jewish people but a universal characteristic of mankind in general. Most non-Jewish people in America today have understood that. The error of pro-Semitism is not that the Jewish people or Jewish heritage is not really good, but rather the error is that intelligence, good will, and kindness is not, thank God, a monopoly of the Jewish people but a universal characteristic of mankind in general.
Therefore you see at thirteen I was not only converted to other religious views but I also stopped believing that the Jewish people are in any way "the chosen people." This is my other reason for requesting not to be included in your work.
I am expecting that you will respect my wishes.
Richard FeynmanEric Rasmusen November 29, 2012 at 7:58 pm GMT
@Rob Schacter your last point is basically spot-on. The Ivies are fairly unique in the high proportion of Jewish applicants. History, geographical bias, and self-selection all play a role. I think the overall preference distortion is probably not as wide as Unz claims, but you will see similar tilts at Stanford, Northwestern, etc. that reflect different preference distortions.
@Leon, two quick points.
1st the census tracks by household, which generally overestimates Asian wealth. Many families have three generations and extended members living in one household (this reflects that many of them work together in a small family business).
2nd most of the time, it's clear in the application (the HS, personal info, other residency info, etc.) which Asian applicants are Asian-American and which are "Parachute Kids". But the numbers are much smaller than one might think, and the implication depends on the school.
At Ivies, parachute kids (both Asian and not) tend to compete with each other in the application pool, and aren't substantially informing the broader admissions thesis in this article. I'm not saying that's right, just saying it's less material than we might think.
They more likely skew the admissions equation in great-but-not-rich liberal arts colleges (like Grinnell) and top public universities (like UCLA), which are both having budget crises and need full fare students, parachute or not. And for the publics, this includes adding more higher-tuition, out-of-state students, which further complicates assertions of just whose opportunities are being lost.
I will bring this back to fundraising and finances again, because the broader point is about who is stewarding and creating access: so long as top universities are essentially run as self-invested feedback loops, and position and resource themselves accordingly (and other universities have to compete with them), we will continue to see large, persistent discrepancies in who can participate.David in Cali November 29, 2012 at 8:16 pm GMT
When I applied to Harvard College back in 1976, I was proud of my application essay. In it, I proposed that the US used the Israeli army as a proxy, just as the Russians were using the Cuban army at the time.
Alas, I wasn't admitted (I did get into Yale, which didn't require free-form essay like that).
This, of course, illustrates the point that coming from an Application Hell instead of from central Illinois helps a student know how to write applications. It also illustrates what might help explain the mystery of high Jewish admissions: political bias. Jews are savvier about knowing what admissions officers like to hear (including the black and Latino ones, who as a previous commentor said aren't likely to be pro-semite). They are also politically more liberal, and so don't have to fake it. And their families are more likely to read the New York Times and thus have the right "social graces" as we might call them, of this age.
It would be interesting to know how well "true WASPS" do in admissions. This could perhaps be estimated by counting Slavic and Italian names, or Puritan New England last names. I would expect this group to do almost as well as Jews (not quite as well, because their ability would be in the lower end of the Legacy group).
David in Cali November 29, 2012 at 8:19 pm GMT
The missing variable in this analysis is income/class. While Unz states that many elite colleges have the resources to fund every student's education, and in fact practice need-blind admissions, the student bodies are skewed towards the very highest percentile of the income and wealth distribution. SAT scores may also scale with parents' income as well.
Tuition and fees at these schools have nearly doubled relative to inflation in the last 25-30 years, and with home prices in desirable neighborhoods showing their own hyper-inflationary behavior over the past couple of decades (~15 yrs, especially), the income necessary to pay for these schools without burdening either the student or parents with a lot of debt has been pushed towards the top decile of earners. A big chunk of the upper middle class has been priced out. This could hit Asian professionals who may be self made harder than other groups like Jews who may be the second or third generation of relative affluence, and would thus have advantages in having less debt when starting their families and careers and be less burdened in financing their homes. Would be curious to see the same analysis if $$ could be controlled.
I would also like to add that I am a late '80′s graduate of Wesleyan who ceased his modest but annual financial contribution to the school after reading The Gatekeepers.
Rebecca November 29, 2012 at 9:33 pm GMT
If I had a penny for every Jewish American I met (including myself) whose first and last name gave no indication of his religion or ethnicity, I'd be rich. Ohand my brother and I have four Ivy League degrees between us.
Anonymous November 29, 2012 at 10:16 pm GMT Anonymous November 29, 2012 at 10:52 pm GMT
I almost clicked on a different link the instance I came across the word "elite" , but curiosity forced my hand.
Just yesterday my mom was remarking how my cousin had gotten into MIT with an SAT score far below what I scored, and she finished by adding that I should have applied to an ivy-league college after high school. I as always, reminded her, I'm too "black for ivy games".
I always worked hard in school, participated in olympiads and symposiums, and was a star athlete. When it came to applying for college I found myself startled when forced to "quantify" my achievements in an "application package". I did not do or engage in these activities solely to boost my chances of gaining admission into some elite college over similarly-hardworking Henry Wang or Jess Steinberg. I did these things because I loved doing them.
Sports after class was almost a relaxation activity for me. Participating in math olympiads was a way for me to get a scoop on advanced mathematics. Participating in science symposiums was a chance for me to start applying my theoretical education to solve practical problems.
The moment I realized I would have to kneel down before some admissions officer and "present my case", outlining my "blackness", athleticism, hard work, curiosity, and academic ability, in that specific order I should point, in order to have a fighting chance at getting admitted; is the moment all my "black rage" came out in an internal explosion of rebellion and disapproval of "elite colleges".
I instead applied to a college that was blind to all of the above factors. I am a firm believer that hard work and demonstrated ability always win out in the end. I've come across, come up against is a better way to put it, Ivy-league competition in college competitions and applications for co-ops and internships, and despite my lack of "eliteness" I am confident that my sheer ability and track record will put me in the "interview candidate" pool.
Finally, my opinion is: let elite schools keep doing what they are doing. It isn't a problem at all, the "elite" tag has long lost its meaning.
Anonymous November 29, 2012 at 11:34 pm GMT
The difficulty with using Jewish sounding last names to identify Jewish students works poorly in two ways today. Not only, as others have pointed out, do many Jews not have Jewish sounding last names, but there are those, my grandson for example, who have identifiably Jewish last names and not much in the way of Jewish background.
Anon November 29, 2012 at 11:50 pm GMT
Interesting reading. The article opens a deceptively simple statistical window into a poorly understood process - a window which I would guess even the key participants have never looked through. I especially appreciated the insights provided by the author's examination of Asian surname-frequencies and their over-representation in NMS databases.
Though this is a long and meticulously argued piece, it would have benefited from a more thorough discussion of the statistical share of legacies and athletic scholarships in elite admissions.
Perhaps, though, it would be better to focus on increasing meritocracy in the broader society, which would inevitably lead to some discounting of the value of educational credentials issued by these less than meritocratic private institutions.
It is precisely because the broader society is also in many key respects non-meritocratic that the non-meritocratic admissions practices of elite institutions are sustainable.
Allan November 30, 2012 at 3:00 am GMT
Despite the very long and detailed argument, the writer's interpretation of a pro-Jewish admissions bias at Ivy-league schools is worryingly flawed.
First, he uses two very different methods of counting Jews: name recognition for counting various "objective" measures such as NMS semifinalists and Hillel stats for those admitted to Harvard. The first is most likely an underestimate while the latter very possibly inflated (in both cases especially due to the very large numbers of partially-Jewish students, in the many interpretations that has). I wonder how much of his argument would just go away if he simply counted the number of Jews in Harvard using the same method he used to count their numbers in the other cases. Would that really be hard to do?
Second, he overlooks the obvious two sources that can lead to such Asian/Jewish relative gaps in admissions. The first is the different groups' different focus on Science/Math vs. on Writing/Culture. It is very possible that in recent years most Asians emphasize the former while Jews the latter, which would be the natural explanation to the Caltech vs Harvard racial composition (as well as to the other stats). The second is related but different and it is the different group's bias in applications: the same cultural anecdotes would explain why Asians would favor applying to Caltech and Jews to Harvard. A natural interpretation of the data would be that Jews have learned to optimize for whatever criteria the Ivy leagues are using and the Asians are doing so for the Caltech criteria.
Most strange is the author's interpretation of how a pro-Jewish bias in admissions is actually put into effect: the application packets do not have the data of whether the applicant is Jewish or not, and I doubt that most admission officers figure it out in most cases. While it could be possible for admissions officers to have a bias for or against various types of characteristics that they see in the data in front of them (say Asian/Black/White or political activity), a systematic bias on unobserved data is a much more difficult proposition to make. Indeed the author becomes rather confused here combining the low education level of admissions officers, that they are "liberal arts or ethnic-studies majors" (really?), that they are "progressive", and that there sometimes is corruption, all together presumably leading to a bias in favor of Jews?
Finally, the author's suggestion for changing admittance criteria is down-right bizarre for a conservative: The proposal is a centralized solution that he aims to force upon the various private universities, each who can only loose from implementing it.
Despite the long detailed (but extremely flawed) article, I am afraid that it is more a reflection of the author's biases than of admissions biases.
WG November 30, 2012 at 11:53 am GMT
Both the article and the comments are illuminating. My takeaways:
1) Affirmative action in favor of blacks and Hispanics is acknowledged.
2) Admissions officers in the Ivy League appear to limit Asian admissions somewhat relative to the numbers of qualified applicants.
3) They may also admit somewhat more Jewish applicants than would be warranted relative to their comparative academic qualifications. The degree to which this is true is muddled by the difficulty of identifying Jews by surnames, by extensive intermarriage, by changing demographics within the Jewish population, by geographic factors, and by the propensity to apply in the first place.
4) (My major takeaway.) White Protestants and Catholics are almost certainly the sole groups that are greatly under-represented relative to their qualifications as well as to raw population percentages.
5) This is due partly to subtle or open discrimination.
6) I would hypothesize that a great many of the white Protestants and Catholics who are admitted are legacies, star athletes, and the progeny of celebrities in entertainment, media, politics, and high finance. White Protestant or Catholic applicants, especially from the hinterlands, who don't fit one of these special categoriesthough they must be a very large component of Mr Unz's pool of top talentare out of luck.
7) And everyone seems to think this is just fine.
The inner and outer ring idea seems to me an excellent one, though the likelihood of it happening is next to nil, both because some groups would lose disproportionate access and because the schools' imprimatur would be diminished in
The larger point, made by several respondents, is that far too many institutions place far too much weight on the credentials conferred by a small group of screening institutions. The great advantage of the American system is not that it is meritocratic, either objectively or subjectively. It is that it isor wasProtean in its flexibility. One could rise through luck or effort or brains, with credentials or without them, early in life or after false starts and setbacks. And there were regional elites or local elites rather than, as we increasingly see, a single, homogenized national elite. Success or its equivalent wasn't something institutionally conferred.
The result of the meritocratic process is that we are making a race of arrogant, entitled overlords, extremely skilled at the aggressive and assertive arts required to gain admission to, and to succeed in, a few similar and ideologically skewed universities and colleges; and who spend the remainder of their lives congratulating each other, bestowing themselves on the populace, and destroying the country.
No wonder we are where we are.
candid_observer November 30, 2012 at 1:25 pm GMT
This article is the product of careful and thoughtful research, and it identifies a problem hiding in plain sight. As a society, we have invested great trust in higher education as a transformative institution. It is clear that we have been too trusting.
That the admissions policies of elite universities are meritocratic is hardly the only wrong idea that Americans have about higher education. Blind faith in higher education has left too many people with largely worthless degrees and crushing student-loan debt.
Of course, the problems don't end with undergraduate education. The "100 reasons NOT to go to grad school" blog offers some depressing reading:
The higher education establishment has failed to address so many longstanding internal structural problems that it's hard to imagine that much will change anytime soon.
candid_observer November 30, 2012 at 1:40 pm GMT
Jack above makes the following point:
"I believe that this article raises and then inappropriately immediately dismisses the simplest and most likely reason for the over-representation of Jewish students at Ivy League Schools in the face of their declining bulk academic performance:
They apply to those schools in vastly disproportionate numbers."
Here's the problem with that point. What Ron Unz demonstrates, quite effectively, is that today's Jews simply don't measure up to either their Asian or their White Gentile counterparts in terms of actual performance when they get into, say, Harvard. The quite massive difference in the proportions of those groups who get into Phi Beta Kappa renders this quite undeniable. What is almost certain is that policies that favored Asians and White Gentiles over the current crop of Jewish students would create a class of higher caliber in terms of academic performance.
If indeed it's true that Jews apply to Harvard in greater numbers, then, if the desire is to produce a class with the greatest academic potential, some appropriate way of correcting for the consequent distortion should be introduced. Certainly when it comes to Asians, college admissions committees have found their ways of reducing the numbers of Asians admitted, despite their intense interest in the Ivies.
Howard November 30, 2012 at 5:11 pm GMT
One way of understanding Unz's results here might be not so much that today's Jewish student is far less inclined to hard academic work than those of yesteryear, but rather that others - White Gentiles and Asians - have simply caught up in terms of motivation to get into elite schools and perform to the best of their abilities.
Certainly among members of the upper middle class, there has been great, and likely increasing, emphasis in recent years on the importance of an elite education and strong academic performance for ultimate success. This might well produce a much stronger class of students at the upper end applying to the Ivies.
It may be that not only the Asians, but upper middle class White Gentiles, are "The New Jews".
Daniel November 30, 2012 at 7:39 pm GMT
I don't always agree with, Mr. Unz, but his expositions are always provocative and informative. As far as the criticisms of his data set go, he openly admits that they are less than ideal. However, the variances are so large that the margin of error can be excused. Jews are 40 TIMES more likely to be admitted to Harvard than Gentile whites. Asians are 10 times more likely. Of course, it could be possible that Jews, because of higher average IQs, actually produce 40 times as many members in the upper reaches of the cognitive elite.
Given Richard Lynn's various IQ studies of Jews and the relative preponderance of non-Jewish and Jewish whites in the population, however, whites ought to have a 7 to 1 representation vis-a-vis Jews in Ivy League institutions, assuming the IQ cutoff is 130. Their numbers are roughly equivalent instead.
Because Ivy League admissions have been a hotbed of ethnic nepotism in the past, it seems that special care should be taken to avoid these improprieties (or the appearance thereof) in the future. But no such safeguards have been put in place. David Brooks has also struck the alarm about the tendency of elites to shut down meritocratic institutions once they have gained a foothold: http://www.nytimes.com/2012/07/13/opinion/brooks-why-our-elites-stink.html?_r=1&ref=global-home
Clannish as the WASPs may have been, they were dedicated enough to ideals of fairness and equality that they opened the doors for their own dispossession. I predict that a new Asian elite will eventually eclipse our Jewish elite. Discrimination and repression can restrain a vigorously ascendant people but for so long. When they do, it will be interesting to see if this Asian cohort clings to its longstanding Confucian meritocratic traditions, embodied in the Chinese gaokao or if it too will succumb to the temptation, ever present in a multiethnic polity, of preferring ethnic kinsmen over others.
Does anyone know how a minority such as the Uighurs fares in terms of elite Chinese university admissions?
Nick November 30, 2012 at 9:06 pm GMT
This may sound like special-pleading, but it's not clear that full-scale IQ measures are meaningful when assessing and predicting Jewish performance. Jewish deficits on g-loaded spatial reasoning task may reflect specific visuo-spatial deficits and not deficits in g. As far as I know, no one doubts that the average Jewish VIQ is at least 112 (and possibly over 120). This score may explain jewish representation which seems to exceed what would be projected by their full-scale iq scores. Despite PIQ's correllation to mathematical ability in most populations, we ought also remember that, at least on the WAIS, it is the VIQ scale that includes the only directly mathematical subtest. We should also note that Jewish mathematicians seem to use little visualization in their reasoning (cf. Seligman
That said, I basically agree that Jews are, by and large, coasting. American Jews want their children to play hockey and join 'greek life' and stuff, not sit in libraries . It's sad for those of us who value the ivory tower, but understandable given their stigmatiziation as a nerdish people.
Alex November 30, 2012 at 9:47 pm GMT
I wonder if it would be at all possible to assess the political biases of admissions counselors at these schools by assessing the rates at which applicants from red states are admitted to the elite universities. I suppose you would have to know how many applied, and those data aren't likely to exist in the public domain.
Ben K November 30, 2012 at 11:18 pm GMT
One major flaw with this article's method of determining Jewish representation: distinctive Jewish surnames in no way make up all Jewish surnames. Distinctive Jewish surnames happen to be held by only 10-12% of all American Jews. In fact, the third most common American Jewish surname after Cohen and Levy is Miller. Mr. Unz' methodology does not speak well for itself, given that he's comparing a limited set of last names against a far more carefully scrutinized estimate.
I'm not suggesting his estimate of national merit scholars and the like is off by a full 90%, but he's still ending up with a significant undercount, possibly close to half. That would still mean Jews may be "wrongfully" over-represented are many top colleges and universities, but the disproportion is nowhere near as nefarious as he would suggest.
candid_observer November 30, 2012 at 11:23 pm GMT
@Nick the "red state" application and admission rates isn't useful data.
Short answer: There are many reasons for this, but basically, historical momentum and comfort play a much bigger role in where kids apply than we think. I assure you, far more top Nebraska HS seniors want to be a Cornhusker than a Crimson, even though many would find a very receptive consideration and financial aid package.
Long answer: 1st, although this article and discussion have been framed in broad racial/cultural terms, the mechanics of college admissions are mostly local and a bit like athletic recruiting coverage (and cultivation) of specific regions and districts, "X" high school historically deliver "X" kinds of candidates, etc. So to the degree we may see broader trends noted in the article and discussion, some of that is rooted at the HS level and lower.
2nd, in "red states", most Ivy applicants come from the few blue or neutral districts. E.g.: the only 2 Utah HS's that consistently have applicants to my Ivy alma mater are in areas that largely mirror other high-income, Dem-leaning areas nationwide rather than the rest of Utah.
3rd, but, with some variation among the schools, the Ivy student body is more politically balanced than usually assumed. Remember, most students are upper-income, Northeastern suburban and those counties' Dem/Rep ratio is often closer to 55/45 than 80/20.
But to wrap up, ideology plays a negligible role in admissions generally (there's always an exception); they have other fish to fry (see below).
@soren in Goldman's post ( http://bit.ly/TrbJSB ) and other commenters here:
"Quota against Asians" is not entirely wrong, but it's too strong because it implies the forward intent is about limiting their numbers.
Put another way, Unz believes the Ivies are failing their meritocractic mission by over-admitting a group that is neither disadvantaged nor has highest technical credentials; and this comes at the expense of a group that is more often disadvantaged and with higher technical credentials. The Ivies would likely reply, "well, we define 'meritocractic mission' differently".
That may be a legitimate counter, but it's also what needs more expansion and sunlight.
But Unz' analysis has a broader causation vs correlation gap. Just because admissions is essentially zero-sum doesn't mean every large discrepancy in it is, even after allowing for soft biases. I've mentioned these earlier in passing, but here are just a couple other factors of note:Admissions is accountable for selection AND marketing and matriculation these are not always complementary forces. Essentially, you want to maximize both the number and distribution (racial, geographic, types of accomplishment, etc.) of qualified applicants, but also the number you can safely turn down but without discouraging future applications, upsetting certain stakeholders (specific schools, admissions counselors/consultants, etc.) or "harming" any data in the US News rankings. And you have a very finite time to do this, and not just your competition, but the entire sector is essentially doing this at the same time. You can see how an admissions process would develop certain biases over time to limit risks in an unpredictable, high volume market, even if rarely intended to target a specific group. Ivy fixation (but especially around HYP) is particularly concentrated in the Northeast a sample from several top HS' across America (public and private) would show much larger application and matriculation variations among their top students than would be assumed from Unz's thesis. Different Ivies have different competitors/peers, which influences their diversity breakdowns to some degree, they all co-compete, but just as often don't. E.g.: Princeton often overlaps with Georgetown and Duke, Columbia with NYU and Cooper Union, Cornell with SUNY honors programs because it has some "in state" public colleges, etc.
There's much more, of course, but returning to Unz's ethnographic thesis, I have this anecdote: we have two friends in finance, whose families think much of their success. The 1st is Asian, went to Carnegie Mellon, and is a big bank's trading CTO; the 2nd is Jewish, went to Wharton, and is in private equity.
Put another way, while both families shared a pretty specific vision of success, they differed a lot in the execution. The upper echelon of universities, and the kinds of elite-level mobility they offer, are much more varied than even 25 years ago. While the relative role of HYP in our country, and their soft biases in admission, are "true enough" to merit discussion, it's probably not the discussion that was in this article.
Bud Wood November 30, 2012 at 11:43 pm GMT
While you may have a point as to the difficulty in some cases of identifying a Jewish surname, the most important thing methodologically is that the criteria be performed uniformly if one is comparing Jewish representation today vs. that of other periods. I can't think, for example, of any reason that Cohens or Levys or Golds should be any less well represented today as opposed to many years ago if indeed there has not been an underlying shift in numbers of Jews in the relevant categories. (Nor, for that matter, should issues like intermarriage affect the numbers much here - for every mother whose maiden name is Cohen who marries a non-Jew with a non-Jewish surname, and whose half Jewish child will be counted as non-Jewish, there is, on average, going to be a man named Cohen who will marry a non-Jew, and whose half Jewish child will be counted as Jewish.)
Neil Schipper December 1, 2012 at 4:54 am GMT
One might suppose that all this "inequity" and "discrimination" matters if we're keeping score. However, seems to me that too much emphasis is typically placed on equality whereas real criteria in productive and satisfying lives are neglected. Kind'a like some people wanting bragging rights as much, if not more, than wanting positive reality.
I guess I just went about my way and lived a pretty god life (so far). Who knows?; maybe those "bragging rights" are meaningful.
Grad Stanford Elec Engrg.
Alex December 1, 2012 at 6:12 am GMT
Thought provoking article.
Ditto to many comments about the "last name problem", even if its correction weakens but doesn't invalidate the argument. (One imagines, chillingly, a new sub-field: "Jewish last name theory", seeking to determine proportionalities of classic names validated against member/donor lists of synagogues and other Jewish organizations.)
Regarding the 20% inner ring suggestion, it suffers from its harsh transition. Consider a randomized derating scheme: a random number between some lower bound (say 0.90) and 1.00 is applied to each score on the ranked applicant list.
The added noise provides warmth to a cold test scores list. Such an approach nicely captures the directive: "study hard, but it's not all about the grades".
By adjusting the lower bound, you can get whatever degree of representativeness relative to the application base you want.
That it's a "just a number" (rather than a complex subjectivity-laden labyrinth incessantly hacked at by consultants) could allow interesting conversations about how it could relate to the "top 1% / bottom 50%" wealth ratio. The feedback loop wants closure.
Anonymous December 1, 2012 at 3:42 pm GMT
You missed my point, candid. A relatively small proportion of Jews, intermarried or otherwise, have distinctive Jewish names. I didn't make that 10-12% figure up. It's been cited in numerous local Jewish population studies and is used in part (but certainly far from whole) to help estimate those populations. It's also been significantly dragged down over the years as the Jewish population (and hence the surname pool) has diversified, not just from intermarriage, but in-migration from groups who often lack "distinctive Jewish surnames" such as Jews from the former Soviet Union. Consider also that for obvious reasons, Hillel, which maintains Jewish centers on most campus, has an incentive to over-report by a bit. Jewish populations on college campuses in the distant past were easier to gather, given that it was far less un-PC to simply point blank inquire what religious background applicants came from.
Again, I'm not saying there isn't a downward trend in Jewish representation among high achievers (which, even if one were to accept Unz's figures, Jews would still be triple relative to were they "should" be). But Unz has made a pretty significant oversight in doing his calculations. That may happen to further suit his personal agenda, but it's not reality.
conatus December 1, 2012 at 4:10 pm GMT
This is interesting, but I suspect mostly bogus, based on your not having a decent algorithm for discovering if someone's Jewish.
I'm not sure what exact mechanism you're using to decide if a name is Jewish, but I'm certain it wouldn't have caught anyone, including myself, in my father's side of the family (Sephardic Jews from Turkey with Turkish surnames), nor my wife's family, an Ellis Island Anglo name. Or probably most of the people in her family. And certainly watching for "Levi, Cohen and Gold*" isn't going to do anything.
And none of us have even intermarried!
Andrew says: Website Show Comment Next New Comment December 1, 2012 at 6:29 pm GMT
Isn't the point about Jewish over representation in the Ivy League about absolute numbers?
Yes the Jewish demographic has a higher IQ at 115 to the Goyishe Kop 100 but Jewish people are only 2% of the population so you have 6 million Jewish people vying with 200 million white Goys for admission to the Ivy League and future control of the levers of power. That is a 33 times larger Bell curve so the right tail of the Goys' Bell curve is still much larger than the Jewish Bell curve at IQ levels of 130 and 145, supposedly there are seven times more Goys with IQs of 130 and over 4 times more Goys with IQs of 145. So why the equality of representation, one to one, Jewish to white Goy in the Ivy Leagues?
http://www.huffingtonpost.com/andrew-phu-quoc-nguyen/asian-american-students_b_2173993.html I hope everyone can participate in gaining admittance and everyone can improve the system legally. Real repair is needed.
Amanda December 1, 2012 at 6:34 pm GMT Scott Locklin says: Website Show Comment Next New Comment December 1, 2012 at 10:09 pm GMT
Russell K. Nieli on study by Thomas Espenshade and Alexandria Radford (mentioned by Unz):
"When lower-class whites are matched with lower-class blacks and other non-whites the degree of the non-white advantage becomes astronomical: lower-class Asian applicants are seven times as likely to be accepted to the competitive private institutions as similarly qualified whites, lower-class Hispanic applicants eight times as likely, and lower-class blacks ten times as likely. These are enormous differences and reflect the fact that lower-class whites were rarely accepted to the private institutions Espenshade and Radford surveyed. Their diversity-enhancement value was obviously rated very low."
Having worked with folks from all manner of "elite" and not so elite schools in a technical field, the main conclusion I was able to draw was folks who went to "elite" colleges had a greater degree of entitlement. And that's it.
Shlomo December 2, 2012 at 4:27 am GMT Anonymous December 2, 2012 at 5:22 am GMT
If all of the author's suspicions are correct, the most noteworthy takeaway would be that Jewish applicants have absolutely no idea that they are being given preferential treatment when applying to Ivys.
Not that they think they are being discriminated against or anything, but no Jewish high school student or their parents think they have any kind of advantage, let alone such a huge one. Someone should tell all these Jews that they don't need to be so anxious!
Also, I know this is purely anecdotal but having gone to an ivy and knowing the numbers of dozens of other Jews who have also gone, I don't think I have ever witnessed a "surprise" acceptance, where someone got in with a score under the median.
Anonymous December 2, 2012 at 9:16 pm GMT
I don't doubt for a minute that it's increasingly difficult for Asian students to get into so-called "elite" universities. Having grown up in that community, I know a lot of people who were pressured into applying at Harvard and Yale but ended up *gasp* going to a very good local school. My sarcasm aside, we can't really deny that having Harvard on your CV can virtually guarantee a ticket to success, regardless of whether or not you were just a C student. It happens.
But what worries me about that is the fact that I know very well how hard Asian families tend to push their children. They do, after all, have one of the highest suicide rates and that's here in the US. If by some means the Asian population at elite universities is being controlled, as I suspect it is, that's only going to make tiger mothers push their children even harder. That's not necessarily a good thing for the child's psyche, so instead of writing a novel here, I'll simply give you this link. Since the author brought up the subject of Amy Chua and her book, I think it's a pretty fitting explanation of the fears I have for my friends and their children if this trend is allowed to continue.
to respond to Alice Zindagi
Asian American does not have higher suicide rate.
Anonymous says: Website Show Comment Next New Comment December 2, 2012 at 9:30 pm GMT Michael O'Hearn says: Website Show Comment Next New Comment December 2, 2012 at 9:43 pm GMT
As a former admissions staff person at Princeton, I always sigh when I read articles on elite college admissions processes which build cases on data analysis but which fail to consult with admissions experts on the interpretation of that data.
I am neither an expert in sociology, nor am I a statistician, but I have sat in that chair, reading thousands of essays, and I have a few observations:The most selective part of any college's admissions process is the part where students themselves decides whether or not to apply. Without data on the actual applicant sets, it is, at the least, misleading to attribute incongruities between the overall population's racial/ethnic/income/what-have-you characteristics and the student bodies' make-ups entirely to the admission decisions. The reality is that there is always a struggle in the admission offices to compensate for the inequities that the applicant pool itself delivers to their doorsteps. An experienced admission officer can tell you that applicants from cultures where academics and education are highly valued, and where the emphasis on a single test is quite high, will generally present with very high SAT scores. Race does not seem to be correlated, but immigrant status from such a culture is highly correlated. (This may partially explain Unz's observation of a "decline" in Jewish scores, although I also do not believe that the surname tool for determining which scores are "Jewish" holds much water.) One of the reasons that such students often fare less well in holistic application processes is that the same culture that produces the work ethic and study skills which benefit SAT performance and GPA can also suppress activities and achievement outside of the academic arena. Therefore, to say that these students are being discriminated against because of race is a huge assumption. The true questions is whether the students with higher test scores are presenting activity, leadership and community contributions comparable to other parts of the applicant pool which are "overrepresented". All of these articles seem to miss the point that a freshman class is a fixed size pie chart. Any piece that shrinks or grows will impact the other slices. My first thought upon reading Unz' argument that the Asian slice shrank was, "What other pieces were forced to grow?" Forced growth in another slice of the class is the more likely culprit for this effect, much more likely than the idea that all of the Ivies are systematically discriminating against the latest victim. I could go on and on, but will spare you! My last note is to educate Mr. Unz on what an "Assistant Director" is in college admissions. Generally that position is equivalent to a Senior Admission Officer (one step up from entry level Admission Officer), while the head of the office might be the Dean and the next step down from that would be Associate Deans (not Assistant Directors). So while Michelle Hernandez was an Assistant Director, she was not the second in charge of Admissions, as your article implies. A minor distinction, but one which is important to point out so that her expertise and experience, as well as my own, as AN Assistant Director of Admission at Princeton, are not overstated.
A last personal note: During Princeton's four month reading season, I worked 7 days a week, usually for about 14 hours a day, in order to give the fullest, most human and considerate reading of each and every applicant that I could give. I am sure that the admission profession has its share of incompetents, corruptible people and just plain jerks, and apparently some of us are not intelligent enough to judge the superior applicants . . . . But most of us did it for love of the kids at that age (they are all superstars!), for love of our alma maters and what they did for us, and because we believed in the fairness of our process and the dignity with which we tried to do it.
The sheer numbers of applicants and the fatigue of the long winters lend themselves to making poor jokes such as the "Night of 1000 Lee's", but a good dean of admission will police such disrespect, and encourage the staff, as mine did, to read the last applicant of the day with the same effort, energy and attention paid to the first. We admission folk have our honor, despite being underpaid and playing in a no-win game with regard to media coverage of our activities. I am happy to be able to speak up for the integrity of my former colleagues and the rest of the profession.
Michael O'Hearn says: Website Show Comment Next New Comment December 3, 2012 at 3:09 am GMT
My own position has always been strongly in the former camp, supporting meritocracy over diversity in elite admissions.
When these Ivy League institutions were first begun in the colonial period, they were not strictly speaking meritocratic. The prevailing idea was that Christocentric education is the right way to go, both from an eschatological and a temporal perspective, and the central focus was on building and strengthening family ties. The Catholic institutions of higher learning took on the vital role of preserving Church tradition from apostolic times and were thus more egalitarian and universalist. The results went far beyond all expectations.
Nothing lasts forever. Your premise misses the essential point that the economy is for man and not vice-versa.
Perhaps this should have been titled The Reality of American Mediocrity ?
Janet Mertz December 4, 2012 at 12:56 am GMT mannning December 4, 2012 at 6:28 am GMT
Many of the statements in this article relating to Jews are rather misleading: for while the Hillel data regarding percentage of students who self-identify as Jews may be fairly accurate, the numbers the author cites based upon "likely Jewish names" are a gross under-count of the real numbers, leading to the appearance of a large disparity between the two which, in reality, does not exist. The reason for the under-count is that a large percentage of American Jews have either Anglicized their family name or intermarried, resulting in their being mistaken for non-Hispanic whites. Thus, one ends up with incorrect statements such as "since 2000, the percentage (of Jewish Putnam Fellows) has dropped to under 10 percent, without a single likely Jewish name in the last seven years". The reality is that Jews, by Hillel's definition of self-identified students, have continued to be prominent among the Putnam Fellows, US IMO team members, and high scorers in the USA Mathematical Olympiad. I have published a careful analysis of the true ethnic/racial composition of the very top-performing students in these math competitions from recent years (see, Andreescu et al. Notices of the AMS 2008; http://www.ams.org/notices/200810/fea-gallian.pdf ). For example, Daniel Kane, a Putnam Fellow in 2002-2006, is 100% of Jewish ancestry; his family name had been Cohen before it was changed. Brian Lawrence was a Putnam Fellow in 2007, 2008, 2010, and 2011; his mother is Jewish. Furthermore, many of the non-Jewish Putnam Fellows in recent years are Eastern European or East-Asian foreigners who matriculated to college in the US; they were not US citizen non-Jewish whites or Asian-Americans, respectively. Rather, my data indicate that in recent years both Jews and Asians have been 10- to 20-over-represented in proportion to their percentage of the US population among the students who excel at the highest level in these math competitions. The authors conclusions based upon data from other types of competitions is likely similarly flawed.
Eric Rasmusen December 4, 2012 at 4:45 pm GMT
The title of this piece captured me to read what it was all about. What was discussed was admissions into elite colleges as the only focus on "meritocracy" in America. That leaves the tail of the distribution of high IQ people in America, minus those that make it into elite colleges, to be ignored, especially those that managed to be admitted to Cal Tech, or MIT, or a number of other universities where significant intellectual power is admitted and fostered. this seems to further the meme that only the elite graduates run the nation. They may have an early advantage through connections, but I believe that the Fortune 400 CEO's are fairly evenly spread across the university world.
MEH 0910 December 5, 2012 at 1:13 pm GMT
A couple more thoughts:
(1) Jews are better at verbal IQ, Asians at math. Your measures are all math. That woudl be OK if all else were equal across time, but especially because Jews care a lot about admissions to Ivies, what we'd expect is that with growing Asian competition in math/science, Jews would give up and focus their energy on drama/writing/service. I wonder if Jewish kids are doing worse in music competitions too? Or rather- not even entering any more.
(2) For college numbers, adjustment for US/foreign is essential. How many Asians at Yale are foreign? It could well be that Asian-Americans are far more under-represented than it seems, because they face quota competition from a billion Chinese and a billion Indians. Cal Tech might show the same result as the Ivies.
(3) A separate but interesting study would be of humanities and science PhD programs. Different things are going on there, and the contrast with undergrads and with each other might be interseting.biaknabato December 6, 2012 at 12:59 am GMT
Half Sigma wrote about this Ron Unz article :
I also learned that Jews are no longer as prominent in math and science achievement, and that's not surprising to me at all, because everyone in the elite knows that STEM is for Asians and middle-class kids. Jewish parents have learned that colleges value sports and "leadership" activities more than raw academic achievement and nerdy activities like math olympiads, and that the most prestigious careers are value transference activities which don't require science or high-level math.
You should re-read my critique of Amy Chua's parenting advice . Jews have figured out that's crappy advice for 21st century America.Eric Rasmusen December 7, 2012 at 4:16 pm GMT
The higher representation of Jews in the Ivies compared to Asians who have better average academic records compared to Jews (applicants that is ) in the Ivies is due to the greater eligibility of Jews for preferences of every kind in the Ivies. In a typical Ivy school like Harvard, at least 60% of the freshman class will disappear because of the vast system of preferences that exists. There is no doubt that there is racial animus involved despite the denials of the Ivies and other private universities despite the constant denials involved like that of Rosovsky who happens to be a historian by training. Jews are classified as white in this country, hence there would presumably greater affinity for them among the white Board of Trustees and the adcom staff. This is in contrast to Asians who do not share the same culture or body physiogonomy as whites do.
I had read the Unz article and the Andrew Goldman response to it. I just do not agree with Unz with his solutions to this problem. First of all private schools are not going to give legacy preferences and other kinds of preferences for the simple reason that it provides a revenue stream. Harvard is nothing but a business just like your Starbucks or Mcdonald's on the corner.
Around the world private universities regarded as nothing but the dumping ground of the children of the wealthy, the famous and those with connections who cannot compete with others with regards to their talent and ability regardless of what anyone will say from abroad about the private universities in their own country. Bottomline is in other countries , the privates simply do not get the top students in the country, the top public school does. People in other countries will simply look askance at the nonsensical admissions process of the Ivies and other private schools, the system that the Ivies use for admission does not produce more creative people contrary to its claims.
The Goldman response has more to do with the humanities versus math . My simple response to Andrew Goldman would be this : a grade of A in Korean history is different from a grade of A in Jewish history, it is like comparing kiwis and bananas. The fast and decisive way of dealing with this problem is simply to deprive private schools of every single cent of tax money that practices legacy preferences and other kinds repugnant preferences be it for student aid or for research and I had been saying that for a long time. I would like to comment on the many points that had been raised here but I have no time.Anonymous December 8, 2012 at 12:29 am GMT
The solution to a lot of problems would be transparency. I'd love to see the admissions and grade data of even one major university. Public universities should be required to post publicly the names, SAT scores, and transcripts of every student. Allowing such posting should be a requirement for admission.
The public could then investigate further if, for example, it turned out that children of state senators had lower SAT scores. Scholars could then analyze the effect of diversity on student performance.
Of course, already many public universities (including my own, Indiana), post the salaries of their professors on the web, and I haven't seen much analysis or muckraking come out of that.Anonymous says: Website December 9, 2012 at 12:44 am GMT
One factor hinted at in the article, but really needing to be addressed is the "school" that is being attended.
By this, I mean, you need philosophy students to keep the philosophy department going. When I was in college 20 years ago, I was a humanities major. I took 1 class in 4 years with an Asian American student. 1 class. When I walked through the business building, it was about 50% Asian.
Could Asian-American students only wanting to go to Harvard to go into business, science, or math be skewing those numbers? I don't know, but it's just a thought to put out there.
You are preaching to the choir! I blog on this extensively on my Asian Blog: JadeLuckClub. This has been going on for the last 30 years or more! All my posts are here under Don't ID as Asian When Applying to College:
http://jadeluckclub.com/category/asian-in-america/dont-id-as-asian-when-applying-to-college/biaknabato December 12, 2012 at 7:42 am GMT
All private schools basically practice legacy prefrences and other kinds of preferences and this practice has been going on in the Ivies since time immemorial. The income revenue from these gallery of preferences will certainly not encourage the Ivies to give them up.
In many countries around the world, private universiites are basically the dumping ground for the children of the wealthy , the famous and the well connected who could not get into the top public university of their choice in their own country. This no different from the Ivies in this country where these Ivies and other private universities are just a corral or holding pen for the children of the wealthy, the famous and the well connected and the famous who could not compete with others based on their won talent or ability.
Abroad you have basically 3 choices if you could not get into the top public university of that country , they are:
- Go to a less competetive public university
- Go to a private university
- or go abroad to schools like the Ivies or in other countries where the entrance requirements to a public or private university are less competetive compared to the top public universities in your own home country.
You can easily tell a top student from another country, he is the guy who is studying in this country under a government scholarship ( unless of course it was wrangled through corruption ). the one who is studying here through his own funds or through private means is likely to be the one who is a reject from the top public university in his own country. That is how life works.
I am generally satisfied with the data that Ron provided about Jews compared to Asians where Jews are lagging behind Asians at least in grades and SAT scores in the high school level, from the data I had seen posted by specialized schools in NY like Stuy , Bronx Sci, Brook Tech, Lowell (Frisco ) etc.
Ron is correct in asserting that the Ivies little represents the top students in this country. Compare UCLA and for example. For the fall 2011 entering freshman class at UCLA , there were 2391 domestic students at UCLA compared to 1148 at Harvard who scored above 700 in the Math portion of the SAT and there were 439 domestic students who scored a perfect 800 in the Math portion of the SAT at UCLA, more than Harvard or MIT certainly. For the fall 2012 freshman classs at UCLA the figure was 2409 and 447 respectively.
We can devise a freshman class that will use only income, SATS,grades as a basis of admissions that will have many top students like UCLA has using only algorithms.
The central test of fairness in any admissions system is to ask this simple question. Was there anyone admitted under that system admitted over someone else who was denied admission and with better grades and SAT scores and poorer ? If the answer is in the affirmative, then that system is unfair , if it is in the negative then the system is fair.Anonymous December 12, 2012 at 7:20 pm GMT biaknabato December 12, 2012 at 11:01 pm GMT
I like the comments from Chales Hale. (Nov. 30, 2012) He says: "Welcome to China". It said all in three words. All of these have been experienced in China. They said there is no new things under the sun. History are nothing but repeated, China with its 5000 years experienced them all.biaknabato December 12, 2012 at 11:32 pm GMT
I meant that there were 439 domestic students in the fall 2011 freshman class at UCLA and 447 domestic students in the fall 2012 freshman class at UCLA who scored a perfect score of 800 in the Math portion of the SAT. In either case it is bigger than what Harvard or MIT has got.
In fact for the fall 2011 of the entire UC system there were more students in the the freshman class of the entire UC system who scored above 700 in the Math portion of the SAT than the entire fall 2011 freshman of the Ivy League (Cornell not included since it is both a public and a private school )'
As I mentioned earlier there were 2409 domestic students in the fall 2012 UCLA freshman class who scored above 700 in the Math portion of the SAT. We know that Harvard had only 1148 domestic students in its fall 2011 freshman class who scored above 700 in the Math portion of the SAT, why would Harvard ever want to have that many top students like Berkeley or UCLA have ? The answer to that is simple , it has to do with money. For every additional student that Harvard will enroll it would mean money being taken out of the endowment .
Since the endowment needs constant replenishment. Where would these replenishment funds come from ? From legacies,from the children of the wealthy and the famous etc. of course . It would mean more legacy admits, more children of the wealthy admitted etc.
That would mean that the admission rate at Harvard will rise, the mean SAT score of the entering class will be no different from the mean SAT scores of the entering freshman classes of Boston University and Boston College
down the road. With rising admission rates and lower mean SAT scores for the entering freshman class that prospect will not prove appetizing or appealing to the applicant pool.
Harvard ranks only 8th after Penn State in the production of undergrads who eventually get Doctorates in Science and Engineering. Of course Berkeley has the bragging rights for that kind of attribute.Been there December 13, 2012 at 5:32 am GMT
In the scenario I had outlined above, it would mean that the mean SAT score of the Harvard freshman class will actually go down if it tried to increase the size of its freshman class and that kind of prospect ia unpalatable to Harvard and that is the reason as to why it wants to maintain its current " air of exclusivity ".
There is another way of looking at the quality of the Harvard student body. The ACM ICPC computer programming competition is regarded as the best known college competition among students around the world , it is a grueling programming marathon for 2 or 3 days presumably. Teams from universities around the world vie to win the contest that is dubbed the "Battle of the Brains " What is arguably sad is that Ivy schools, Stanford and other private schools teams fielded in the finals of the competition are basically composed of foreign students or foreign born students and foreign born coaches.
The University of Southern California team in this competition in its finals section was made up of nothing but foreign Chinese students and a Chinese coach. The USC team won the Southern California competition to win a slot in the finals. Apparently they could not find a domestic student who could fill the bill. However the USC team was roundly beaten by teams from China and Asia,Russia and Eastern Europe. The last time a US team won this competition was in 1999 by Harvey Mudd, ever since the US had gone downhill in the competition with the competition being dominated by China and Asia and by countries from Eastern Europe and Russia. Well I guess USC's strategy was trying to fight fire with fire (Chinese students studying in the US versus Chinese students from the Mainland ), and it failed.Anonymous December 13, 2012 at 6:39 pm GMT
Thank you Mr. Unz for scratching the surface of the various forms of corruption surrounding elite college admissions. I hope that your next article further discusses the Harvard Price (and Yale Price and Brown Price etc). The recent press surrounding the Hong Kong couple suing the person they had retained to pave their children's way into Harvard indicates the extent of the problem. This Hong Kong couple just were not savvy enough to lay their money down where it would produce results.
Additionally, a discussion of how at least some North Eastern private schools facilitate the corrupt process would be illuminating.
Finally, a more thorough discussion of whether the Asian students being admitted are US residents or nationals or whether they are foreign citizens would also be worth while and reveal. I suspect, an even lower admit percentage for US resident citizens of Asian ethnicity.
For these schools to state that their acceptances are need blind is patently untrue and further complicates the admissions process for students who are naive enough to believe that. These schools should come clean and just say that after the development admits and the wealthy legacy admits spots are purchased, the remaining few admits are handed out in a need blind fashion remembering that many of admit pools will already be filled by the development and wealthy legacy admits resulting in extraordinarily low rates for certain non-URM type candidates (I estimate in the 1% range).Larry Long says: Website December 14, 2012 at 4:33 am GMT
"By contrast, a similarly overwhelming domination by a tiny segment of America's current population, one which is completely misaligned in all these respects, seems far less inherently stable, especially when the institutional roots of such domination have continually increased despite the collapse of the supposedly meritocratic justification. This does not seem like a recipe for a healthy and successful society, nor one which will even long survive in anything like its current form."
I completely agree that it is not healthy for one tiny segment of our population to basically hold all the key positions in every major industry in this country. If Asians or Blacks (who look foreign) all of a sudden ran education, media, government, and finance in this country, there would be uproar and resistance. But because Jewish people look like the majority (whites), they've risen to the top without the masses noticing.
But Jewish people consider themselves a minority just like blacks and Asians. They have a tribal mentality that causes stronger ethnic nepotism than most other minority groups. And they can get away with it because no one can say anything to them lest they be branded "jew-hunters" or "anti-semists."
The question is, "where do we go from here?" True race-blind meritocracy will never be instituted on a grand scale in this country both in education and in the work force. One group currently controls most industries and the only way this country will see more balance is if other groups take more control. But if one group already controls them all and controls succession plans, how will there ever be more balance?Anonymous December 14, 2012 at 3:00 pm GMT
If Jews become presidents or regents of universities, that's a credit to their ability. Nothing sinister there.
But when Jews (or anyone) buy into an institution to create the 'Goldman School of Business', or when they give large donations, that is not a credit to anyone's ability and there may well be something sinister there.
It is no secret that corporations and individuals look for influence, if not control, in return for cash. The same thinking can easily affect admissions policy.
It's always the same. In spite of all the jingoism about "democracy" and "freedoms" and the "free market capitalist system", the trail of money obfuscates and corrupts. It is still very true that whoever pays the piper, calls the tune. And naive to believe otherwise.
How recent was it that Princeton cancelled its anti-Semitism classes for lack of participation, and at least one Jewish organisation was screaming that Princeton would never get another penny from any Jew, ever.
That is close to absolute control of a curriculum. I give you money, and you teach what I want you to teach.
How far is that from I give you money and you admit whom I want you to admit? Or from I give you money and you hire whom I want?
A university that is properly funded by the government "the people" doesn't have these issues because there is nothing you can buy.
Operating educational institutions as a business, just like charities and health care, will always produce this kind of corruption.
Two other points:
1. It occurred to me that the lowly-paid underachiever admissions officers might well have been mostly Jewish, and hired for that reason, and that in itself could skew the results in a desired manner.
2. I think this is a serious criticism of the othewise excellent article:
At the end, Ron Unz wants us to believe that a $30-billion institution, the finest of its kind in the world, the envy of the known universe and beyond, the prime educator of the world's most prime elites, completely abandons its entire admissions procedures, without oversight or supervision, to a bunch of dim-witted losers of "poor human quality" who will now choose the entire next generation of the nation's elites. And may even take cash payments to do so.
Come on. Who are you kidding? Even McDonald's is smarter than this.Anonymous December 14, 2012 at 7:54 pm GMT
Some of the comments suggest major problems with estimating who is Jewish. But the authors information is underpinned by data collected by Jewish pressure groups for the purpose of ensuring the gravy train keeps flowing. It's either their numbers, or the numbers are consistent with their numbers.Achaean December 15, 2012 at 12:50 pm GMT
This article, to me, is shocking and groundbreaking. I don't think anyone has gone this in-depth into this biased and un-meritocratic system. This is real analysis based on real numbers.
Why is this not getting more coverage in the media? Why are people so afraid to talk about this?
There is an excellent analysis of this article at The Occidental Observer by Kevin MacDonald, "Ron Unz on the Illusory American Meritocracy". The MSM is ignoring Unz's article for obvious reasons.tomo December 15, 2012 at 10:46 pm GMT
I don't know if there's any truth behind the idea that Japanese Americans have become lazy relative to their Korean and Chinese counterparts. I've grew up in Southern California, a part of the country with a relatively high percentage of Japanese Americans, yet I've know very few other Japanese Americans in my life. I can recall one Japanese American classmate in jr. high, and one Japanese classmate in my high school (who returned to Japan upon graduating). Even at the UC school I attended for undergrad, I was always the only Japanese person in the every class, and the Japanese Student Association, already meager in numbers, was almost entirely made up of Japanese International students who were only here for school.
If, in fact, 1% of California is made up of Japanese Americans, I suspect they are an aging population. I also think many 2nd and 3rd generation Japanese Americans are only partially Japanese, since, out of necessity, Japanese Americans have a very high rate of out marriage.Anonymous December 20, 2012 at 5:04 pm GMT Lynn December 20, 2012 at 6:37 pm GMT
The carefully researched article makes a strong case that there is some discrimination against Asian-Americans at the Ivy League schools.
On the other hand, I don't see how a percentage of 40-60% Asian-Americans at the selective UC schools, even given the higher percentage of Asian-Americans in California, does not perhaps reflect reverse discrimation, or at least affirmative action on their behalf. To be sure one way or the other, we would have to see their test scores AND GPA, apparently the criteria that the UC schools use for admission, considered as well in the normalization of this statistical data.Titanium Dragon December 20, 2012 at 9:59 pm GMT
The replies to date make some good points but also reflect precisely the biases pointed out in the article as likely causing the discussed distortions.
1) use of name data in achievement vs use of Hillel data for Ivy admits: definitely an issue but is this only one of the measures used in this study. Focusing only on this obscures the fact that Jewish enrollment as measured over time by Hillel numbers (apples to apples) increased significantly over the past decade while the percent of Jewish high school age students relative to other groups declined. One explanation for this surge could be that Jewish students became even more academically successful than they have been in the past. The achievement data using Jewish surnames is used to assess this thesis in the absence of other better data. Rejecting the surname achievement data still leaves a huge enrollment surge over time in Jewish attendance at the Ivies relative to their percentage of the population.
2) many comments accept that the numbers show disproportionate acceptance and enrollment growth but simply then go on to assert that Jewish students really are smarter (absolutely or in gaming the system) relying on anecdotal evidence that is not at all compelling. All definitions of "smarter" contain value judgments". Back in the '20s the argument was that the Ivies should rely more on objective testing to remove bias against the then high testing Jewish students; now the writers argue conveniently wthat the new subjective tests that are applied to disproportionately admit Jewish students over higher scoring Asians and non-Jewish Caucasians are better measures. In both cases, there is still an issue of using a set of factors that disproportionately favors one group. In all such cases of significant disproportionate admits, the choice of the factors used to definemmerit and their application should be carefully evaluated for bias. The burden of proof should shift to those defending the status quo in this situation. In any event, it is clear that given the large applicant pool, there is no shortage of non-Jewish caucasians and Asians who are fully qualified, so if the desire was there for a balanced entering class, the students are available to make it happen
3) the numbers don't break down admissions between men and women. When my child was an athletic recruit to Harvard, we received an ethnic breakdown of the prior year's entering class. I was surprised to discover that the Caucasian population skewed heavily male and the non-white/Asian population skewed heavily female. It seemed that Harvard achieved most of its ethnic diversity that year by admitting female URMs, which made being a Caucasian female the single most underrepresented group relative to its percentage in the school age population. I'm curious if this was an anomaly or another element of bias in the admissions process.
I will note that there is one flaw in this whole argument, and that flaw is thus:
Harvard and Yale aren't the best universities in the country. As someone who went to Vanderbilt, I knew people who had been to those universities, and their evaluation was that they were no better and perhaps actually worse than Vanderbilt, which is "merely" a top 25 university.
While there is a great deal of, shall we say, "insider trading" amongst graduates of those universities, in actuality they aren't actually the best universities in the country today. That honor probably goes to MIT and Caltech, which you note are far more meritocratic. But most of the other best universities are probably very close in overall level, and some of them might have a lot of advantages over those top flight universities.
Or to put it simply, the Ivy League ain't what it used to be. Yeah, it includes some of the best universities in the country, but there are numerous non-Ivy League universities that are probably on par with them. This may indeed be in part a consequence of some of what you have described in the article, as well as a sense of complacency.
I suspect that in twenty or thirty years a lot of Ivy League graduates are going to feel a lot less entitled simply because there has been an expansion of the top while they weren't paying attention.Anonymous December 21, 2012 at 9:06 am GMT McRoss December 22, 2012 at 12:49 am GMT
I'm against the Ivies going up to 30-50% Asian but I'm also against the over-representation of a tiny minority group. This country is going to go downhill if we continue to let one group skirt a fair application process just because they possess money and influence. Who will stand up for fairness and equality?Anonymous December 22, 2012 at 4:11 am GMT
Many of those commenting above don't seem to be picking up on Unz's evidence of bias against white Gentiles, which by meritocratic measures is far worse than the bias against Asian Americans.
A drop of 70 PERCENT??? What's going on? Why is so much of the discussion that this article has spawned focused only on Asian Americans and (secondarily) Jews?Anonymous December 25, 2012 at 3:22 am GMT
National Merit Scholarship semifinalists are chosen based on per-state percentiles.
What this means is that NMS semifinalist numbers would be skewed _against_ a high-performing demographic group to the extent that group's demographics concentrate geographically. Mr. Unz acknowledges that geographical skewing of Jewish populations is huge. However, he ignores its effect on the NMS semifinalist numbers he uses as a proxy for academic performance on a _national_ level to predict equitable distributions at _national_ universities.
Please somebody explain to me how this oversight isn't fatal to his argumentsAnonymous December 25, 2012 at 9:12 am GMT
Surely the author must be aware that approximately half the children with "Jewish" names are not fully Jewish. Over half of the marriages west of the Mississippi are reportedly mixed. Many non-Jews have last names that start with "Gold". Just these two facts make the entire analysis ridiculous. Hillel does not keep statistics on how Jewish a student is, while many of Levys and Cohens are not actually Jewish. What would we call Amy Chua's daughters? Jewish or Asian? It is therefore impossible to tease out in a multi-racial society who is who.
I am an elementary school teacher at a Title One school in northern California. I supported your "English for the Children" initiative when it was introduced.
However, the law of unintended consequences has kicked in, and what exists now is not at all what you (or anyone else, for that matter) had intended.
The school day was not lengthened to create a time slot for English language instruction. Instead, history and science classes were elbowed aside to make way for mediocre English language instruction. These usually worthless classes have crowded out valuable core academic instruction for English language learners.
To make matters worse, while English language learners are in ESL classes, no academic instruction in science or history can be given to "regular" students because that would lead to issues of "academic inequity." In other words, if the Hispanic kids are missing out on history, the black kids have to miss out on it, too.
As a teacher, I hope you will once again consider bringing your considerable talents to focus on the education of low-income minority children in California.
Shelly MooreAnonymous December 25, 2012 at 4:50 pm GMT Anonymous December 25, 2012 at 7:18 pm GMT
Fascinating and disturbing article.
Could it be that the goal of financial, rather than academic, achievement, makes many young people uninterested in competing in the science and math competitions sought out by the Asian students? I wonder about the different percentages of applicants to medical school versus law or business.
I must also add that I am surprised that the author used the word "data" as singular, rather than plural. Shouldn't he be stating that the data ARE, not IS; or SHOW, not SHOWS.Anonymous says: Website December 25, 2012 at 8:23 pm GMT
The author perhaps pays an incredible amount of attention to those with strengths in STEM fields (Science, technology, engineering, and math), even though the proportion of all native-born white students majoring in these fields has plummetted in recent decades. That means that he overlooks a shift in what kinds of training is considered "prestigious," and that this might be reflected in the pursuits of students in high school. Perhaps there is a movement away from Jewish students' focus on Math Olympiad because they are in no way interested in majoring in math or engineering fields, instead preferring economics or business. Is that the fault of the students, or of the rewards system that corporate America has set up?
Jobs in STEM fields pay considerably less than do jobs in numerous professions - investment banking and law. So that is why ~ 40% of the Harvard graduating class - including many of its Jewish students - pursue that route. But to rely on various assessments of math/science/computing as the measure of intelligence fails to incorporate how the rewards structure in our society has changed over time.
I teach at an Ivy League university, and believe that many of the authors' arguments have merit, but there are also many weaknesses in his argument. He sneers at Steinberg and the other sociologists he cites for not quite getting how society has changed - but he clearly doesn' tunderstand how other aspects of our society have changed. Many of our most talented undergrads have no desire to pursue careers in STEM fields. Entrance into STEM jobs even among those who majored in those fields is low, and there is very high attrition from those fields, among both men and women. Young adults and young professionals are voting with their feet. While our society might be better off with more Caltech grads and students interested in creating our way to a better future rather than pursuing riches on wall street, one cannot fault students for seeking to maximize their returns on their expensive education. That's the system we have presented them with, at considerable cost to the students and their families.
Personally, what I found profoundly disturbing is not the overrepresentation of Jewish students or the large presence of Asians who feel they are discriminated against, but the fact that Ivy League schools have not managed to increase their representation of Blacks for the last 3 decades. We all compete for the same talent pool. And until the K-12 system is improved, Black representation won't increase without others screaming favoritism. The other groups - high performing Asians, middle class Jews - will do fine, even if they don't get into Ivy League schools but have to "settle" for elite private schools. But if the Ivy Leagues are the pathway to prestige and power, than we're not broadening our power base enough to adequately reprewsent the demographic shifts reshaping our nation. more focus on that, please.Dismalist December 25, 2012 at 10:49 pm GMT
I've been an SAT tutor for a long time in West Los Angeles (a heavily Asian city), and I feel that at least some of Asians' over-representation in SAT scores and NMS finalists is due to Asian parents putting massive time and money into driving their children's success in those very statistics.
In my experience, Asian parents are more likely than other parents to attempt to ramrod their kids through test prep in order to increase their scores. For example, the few students I've ever had preparing for the PSAT - most students prepare only for the SAT - were all Asian.
Naturally, because it's so strange to be preparing for what is supposed to be a practice test, I asked these parents why their 9th or 10th grade child was in this class, and the answer was that they wanted to do well on the PSAT because of its use in the NMS! Similarly, many Asian immigrants send their children to "cram school" every day after regular school lets out (and I myself have taught SAT at one of these institutions), essentially having their students tutored in every academic subject year-round from early in elementary school.
Because whites are unlikely to do this, it would seem to me that the resulting Asian academic achievement is analogous to baseball players who use steroids having better stats than baseball players who do not.
It seems reasonable that the "merit" in "meritocracy" need not be based solely on test scores and grades, and that therefore a race-based quota system is not the only conclusion that one can draw from a decrease in the attendance rate of hard-driving test-preppers. Maybe the university didn't want to fill its dorms with grade-grubbers who are never seen because they're holed up in the library 20 hours a day, and grade-grubbers just happen to be over-represented in the Asian population?
Unz's piece analyzes only the data that lead up to college - when the Asian parents' academic influence over their children is absolute - whereas the Ivy League schools he criticizes are most concerned with what their students do during and after college. Is the kid who went to cram school his entire life as likely to join student organizations? To continue practicing his four instruments once his mom isn't forcing him to take lessons 4 days a week? To start companies and give money to his university? Or did he just peak early because his parents were working him so hard in order to get him into that college?
That's an article I'd like to read.Anonymous December 25, 2012 at 11:11 pm GMT
The analysis is a tour de force!
However, the remedies considered are not. It is silly to believe that all abilities can be distilled into a small set of numbers, and anyway, no one knows what abilities will succeed in marketplaces. The source of the problem is the lack of competition in education, including higher education, a situation written in stone by current accreditation procedures. The solution to the problem is entry. Remember Brandeis U? With sufficient competition, colleges could take whomever they pleased, on whatever grounds, and everyone would get a chance.Anonymous December 26, 2012 at 12:18 am GMT
Concerning the drop in non-Jewish white enrollment:
I am a recent graduate of a top public high school, where I was a NMS, individual state champion in Academic Decathlon, perfect ACT score, National AP Scholar, etc. etc. Many of my friends almost exclusively white and Asian had similar backgrounds and were eminently qualified for Ivy. None of us even applied Ivy, let alone considered going there. Why? At $60,000/yr, the cost is simply not worth it, since none of us would have been offered anything close to substantial financial aid and our parents were unable/unwilling to fully fund our educations. Meanwhile, my Asian friends applied to as many Ivies as they could because it was understood that (a) their parents would foot the bill if they got in or (b) they would take on a large debt load in order to do it.
This article discounts financial self-selection, which (at least based on my own, anecdotal evidence) is more prevalent than we tend to think.Simon December 26, 2012 at 2:35 am GMT
- The author ignores the role that class plays in setting kids up for success. At one point he notes, "Given that Asians accounted for just 1.5 percent of the population in 1980 and often lived in relatively impoverished immigrant families. . ." When I was at Harvard in the mid-1980s, there were two distinct groups of Asian students: children of doctors, academics, scientists and businesspeople who came from educated families in China, Korea and Vietnam, and therefore grew up with both strong educational values and parental resources to push them; and a much smaller group of kids from Chinatown and Southeast Asian communities, whose parents were usually working class and uneducated. The second group were at a severe disadvantage to the first, who were able to claim "diversity" without really having to suffer for it.
- I would expect you'd see the same difference among higher-caste educated South Asian Brahmins and Indians from middle and lower castes or from places like Guyana. It is ridiculous to put South Asians and East Asians in the same category as "Asian." They have different cultural traditions and immigration histories. Ask any Indian parent what race they are and they'll answer "Caucasian." Grouping them without any kind of assessment of how they might be different undermines the credibility of the author.
- The takeaway is not that affirmative action is damaging opportunities for whites, but that whites are losing against Asians. The percentage of Hispanic and Black students at leading schools is still tiny. Hence, if invisible quotas for Asians are lifted, there will be far fewer white students at these schools. This isn't because of any conspiracy, but because white students are scoring lower than the competition on the relevant entry requirements. I would love to see an article in this publication titled, "Why White Students Are Deficient." How about some more writing about "The White Student Achievement Gap?"Anonymous December 26, 2012 at 2:42 am GMT
As parents of 2 HYP grads, We can tell you from experience that Asian students are not under-represented in the Ivies today. (In fact, I think they are slightly over represented, for the same reasons and stats the author cited).
True, if one looks at stats, such as SAT, scientific competition awards etc, it seems to imply that a +35% enrollment of Asian students is warranted. However, these indicators are just a small part of a "holistc" approach in predicting the success of a candidate not only in the next 4 years, but the individual's success in life and be able to impact and contribute to society later.
I have seen candidates of Asian background, who score almost full mark in SAT but was less than satisfactory in all other aspects of being a potential achiever in life.
Granted, if one wants to be an achiever in science and technology, by all means go with Caltech and MIT. But if one wants an real "education" and be a leader later on in life, one has to have other qualities as well (skin color is NOT one of them). Of course, history, and current cultural and political climate may influence the assessment of such qualities because it is highly subjective. (Is is unfair to pick a pleasant looking candidate over a lesser one, if the rest are the same?)
That is why an interview with the candidates is a good way to assess a potential applicant. I always encourage my children to conduct interviews locally for their alma mater.
I just hope that the Ivies do not use this holistic approach to practice quota policies.
Oh btw I am Asian.
SAnonymous December 26, 2012 at 2:53 am GMT
Here's a quote from a friend just today about this related topic: "Just like the Catholic church in the middle ages recruited the smartest peasants in order to forestall revolutionary potential, and to learn mind bending religious dogma to befuddle the remaining peasants, current practice is much the same. To twist Billy Clinton's mantra, "its the economy stupid", No ,"its the co opted brains"! "
We can substitute economics dogma to the befuddlement mix. The bottom line is every ruling elite has co-opted the top 1%-5% of high wage earners, to make the pyramid work. Sociology writing is all over this. Veblen, Weber, etc. We can see this little group created everywhere minerals or natural resources are coveted by private empires.
The universities are doing exactly what they are supposed to do to protect the interests of the Trustees and Donors who run them for a reason. They are a tool of, not a cause of, the inequality and over-concentration. It is interesting how the story goes into hairsplitting and comparing Asians to others, etc. But, the real story is a well understood sociology story. This article explains why Napoleon established free public education after the French Revolution.Anonymous December 26, 2012 at 4:19 am GMT
This is a fascinating article. So much data. So many inferences. It's hardly surprising to any parent of high school students that college admissions are only marginally meritocratic. Whether that's a good a thing or a bad thing is an open question. I think meritocracy has a place in college admissions. But not the only place. Consider athletics, which are themselves almost exclusively meritocratic. Only the best among the best are offered Division I scholarships. The same, I think, applies to engineering schools, the physical sciences, and (to a lesser degree), elite law schools. It also applies to auto-mechanics, plumbers, and electricians. Regarding the humanities (a field in which I hold a PhD), not so much. I think Unz's beef is less with admissions policies per se (which I agree are mind-bogglingly opaque) than with the status of elite institutions. I also think, and I may be wrong, that Unz appears heading down the Bobby Fisher highway, intimating that those pesky Jews are
America never promised success through merit or equality. That is the American "dream." America promises freedom of religious belief and the right to carry a gun.Anonymous says: Website Show Comment Next New Comment December 26, 2012 at 4:16 pm GMT Anonymous says: Website Show Comment Next New Comment December 27, 2012 at 4:48 am GMT
This is a fascinating and extremely important article which I am very eager to discuss privately with the author, having spent my whole life in higher education, albeit with a unique perspective. I was flabbergasted the findings about Jewish and non-Jewish white representation, and intrigued, all the more so since my own ancestry is evenly divided between those two groups. I do want to make one criticism, however of something the author said about the 1950s which I do not think is correct.
At one point in the article the author makes the claim that the breakdown of Ivy League Jewish quotas in the 1950s reflected the power of Jews in the media and Hollywood. The statistics he gives about their representation there may be correct, but the inference, I believe, is unsustainable. The Proquest historical database includes the Washington Post, New York Times, and many other major newspapers. I did a search for "Harvard AND Jewish AND quota" for the whole period 1945-65 and it turned up only 20 articles, not one of which specifically addressed the issue of Jewish quotas at Harvard and other Ivy League schools. The powerful Jews of that era had reached their positions by downplaying their originsoften including changes in their last namesand they were not about to use their positions overtly on behalf of their ethnic group. (This could be, incidentally, another parallel with today's Asians.) Those quotas were broken down, in my opinion, because of a general emphasis on real equality among Americans in those decades, which also produced the civil rights movement. The Second World War had been fought on those principles.
I could not agree more that the admissions policies of the last 30 years have produced a pathetic and self-centered elite that has done little if any good for the country as a whole.Jordan December 27, 2012 at 5:12 am GMT
It is really refreshing to see in print what we all know by experience, but I have to wonder out loud, what is our higher purpose? Surely, you have a largely goal than merely exposing corruption in the academy. Lastly, I have to wonder out loud, how would the predicament of the working class fit into your analysis? I thank you for this scathing indictment of higher ed that has the potential to offer us a chillingly sobering assessment.Anonymous December 27, 2012 at 9:09 pm GMT
This is why we need to reinstate a robust estate tax or "death tax" as conservatives derisively call it. To break the aristocracy described in this article. No less than Alexis de Tocqueville said that the estate tax is what made America great and created a meritocracy (which now is weaker and riddled with loopholes, thus the decline of America). Aristocracies dominated Europe for centuries because they did not tax the inheritance.Peter December 28, 2012 at 3:37 am GMT
The day when I learned so many Chinese ruling class' offspring are either alumni or current students of Harvard (the latest example being Bo GuaGua), it was clear to me Harvard's admission process is corrupt. How would any ivy college determine "leadership" quality? Does growing up in a leader's family give you more innate leadership skills? Harvard obviously thinks so.
Therefore, it's not surprising that Ron said the following on this subject. " so many sons and daughters of top Chinese leaders attend college in the West ..while our own corrupt admissions practices get them an easy spot at Harvard or Stanford, sitting side by side with the children of Bill Clinton, Al Gore, and George W. Bush." I hope world peace will be obtained within reach in this approach.
The chilling factor is a hardworking Chinese immigrant's child in the U.S. would have less chance of getting into ivies than these children of privileged.
It was also very disappointing to see another Asian parent whose children are HYP alumni saying too many Asians in ivies, despite the overwhelming evidence showing otherwise.Anonymous December 28, 2012 at 5:30 pm GMT
Perhaps it's to be expected given the length of the article (over 22,000 words), but so many of the objections and "oversights" raised in the comments are in fact dealt with in detail and with a great deal of respect by Unz in the article itself.
For example, this:
National Merit Scholarship semifinalists are chosen based on per-state percentiles.
What this means is that NMS semifinalist numbers would be skewed _against_ a high-performing demographic group to the extent that group's demographics concentrate geographically. Mr. Unz acknowledges that geographical skewing of Jewish populations is huge. However, he ignores its effect on the NMS semifinalist numbers he uses as a proxy for academic performance on a _national_ level to predict equitable distributions at _national_ universities.
Please somebody explain to me how this oversight isn't fatal to his argument
because geographical skewing of Asian populations is also huge, yet we don't witness the same patterning in admissions data pertaining to Asian students. As the article states: "Geographical diversity would certainly hurt Asian chances since nearly half their population lives in just the three states of California, New York, and Texas."
Unz goes on to note: "Both groups [Jews and Asians] are highly urbanized, generally affluent, and geographically concentrated within a few states, so the 'diversity' factors considered above would hardly seem to apply; yet Jews seem to fare much better at the admissions office."
So there's your answer.
And aside from the fact that your "basic question" has a very simple answer, it's just ludicrous in any case to suggest that the validity of the entire article rests on a single data point.Anonymous December 28, 2012 at 7:47 pm GMT
There is no doubt this is more of a political issue than the academic one. If only merit is considered then asian american would constitute as much as 50% of the student population in elite universities. Politically and socially this is not a desired outcome. Rationale for affirmative action for the african americans and hispanics is same leaving a large population is in elite institution is not desired, it smacks of segregation.
But the core issue remains unsolved. Affirmative action resulted in higher representation but not the competitiveness of the blacks. I am afraid whites are going the similar path.Anonymous December 29, 2012 at 2:31 am GMT
Anyone famliar with sociology and the research on social stratification knows that meritocracy is a myth; for example, if one's parents are in the bottom decile of the the income scale, the child has only a 3% chance to reach the top decile in his or her lifetime. In fact, in contrast to the Horatio Alger ideology, the U.S. has lower rates of upward mobility than almost any other developed country. Social classses exist and they tend to reproduce themselves.
The rigid class structure of the the U.S. is one of the reasons I support progressive taxation; wealth may not always be inherited, but life outcomes are largely determined by the class position of one's parents. In this manner, it is also a myth to believe that wealth is an individual creation;most financially successful individuals have enjoyed the benefits of class privilege: good and safe schools, two-parent families, tutors, and perhaps most important of all, high expecatations and positive peer socialization (Unz never mentions the importants of peeer groups, which data show exert a strong causal unfluence on academic performance).
And I would challenge Unz's assertion that many high-performing Asians come from impovershed backgrounds: many of them may undereport their income as small business owners. I believe that Asian success derives not only from their class background but their culture in which the parents have authority and the success of the child is crucual to the honor of the family. As they assimilate to the more individualist American ethos, I predict that their academic success will level off just as it has with Jews.Rosell December 29, 2012 at 8:00 am GMT
1. HYP are private universities: the success of their alumni verifies the astuteness of their admissions policies.
2. Mr. Unz equates "merit" with "academic". I wonder how many CalTech undergrads would be, or were, admitted, to HYP (and vice-versa).
3. I would like ethnic or racial stats on, for several examples, class officers, first chair musicians*, job holders, actors^, team captains, and other equally valuable (in the sense of contributing to an entering freshman class) high-school pursuits.*By 17, I had been a union trombonist for three years; at Princeton, I played in the concert band, the marching band, the concert orchestra, several jazz ensembles, and the Triangle Club orchestra.^A high school classmate was John Lithgow, the superb Hollywood character actor. Harvard gave him a full scholarship and they should have.Anonymous December 29, 2012 at 12:31 pm GMT
What if we were one homogeneous ethnic group? What dynamic would we set up then?
I suggest taking the top 20% on straight merit, based on SAT scores, whether they crammed for them or not, and take the next 50% from the economically poorest of the qualified applicants (1500 1600 on the SAT?) by straight ethnicity percentages to directly reflect population diversity, and 30% at random to promote some humility, and try that for 20 years and see what effects are produced in the quality of our economic and political leadership. And of course, keep them all in the dark as to how they actually got admitted.
Maybe one effect is that more non-ivy league schools will be tapped by the top recruiters.Anonymous December 29, 2012 at 6:23 pm GMT
"Surely the author must be aware that approximately half the children with "Jewish" names are not fully Jewish. Over half of the marriages west of the Mississippi are reportedly mixed. Many non-Jews have last names that start with "Gold". Just these two facts make the entire analysis ridiculous. Hillel does not keep statistics on how Jewish a student is, while many of Levys and Cohens are not actually Jewish. What would we call Amy Chua's daughters? Jewish or Asian? It is therefore impossible to tease out in a multi-racial society who is who."
Well, there are several arguments to be made. First, unless you are advocating that there has been a mass adoption of words like "Gold" in non-Jewish last names these past 10, 15 years, that argument sinks like a stone. Second, by selecting for specifically Jewish last names, intermarriage can be minimized but not eliminated. How many kids with the lastname "Goldstein" was a non-Jew in the last NMS? Not likely a lot of them.
Intermarriage can account for some fog, but not all, not by a longshot. Your entire argument reeks of bitter defensiveness. You have to come to grips that Jews have become like the old WASPs, rich, not too clever anymore, and blocking the path forward for brighter, underrepresented groups.
Sucks to be you.Jewess December 30, 2012 at 2:02 am GMT
With all due respect, I was worried that I would get an answer that lazily points to the part of the essay that glosses over this point (which mind you I had combed through carefully before posting my question). However, I was hoping that in response someone might respond who had thought a little more carefully about the statistical fallacy in Unz's essay: that far-reaching statements about nation-wide academic performance can be drawn directly from per-state-percentiles.
Yes, Asian Americans, like Jews, have concentrations. But their geographical distributions differ. Yes, it might be possible that upon careful analysis of relative distributions of populations and NMS semifinalists in each state Unz might be able to draw a robust comparison: he might even come up with the same answer. The point that I made is that he doesn't even try.
Given the lengths Unz goes to calculate and re-calculate figures _based_on_ the assumption of _equal_ geographic distributions among Asians and Jews, it is - and I stand by this - a disservice to the reader that no effort (beyond hand-waving) is made to quantitatively show the assumption is at all justified.Anonymous January 2, 2013 at 2:49 am GMT
The statistical analysis used in this article is flawed. The author uses last names to identify the religion (or birth heritage) of NMS semifinalists? Are you serious? My son was a (recent) National Merit Finalist and graduated from an ivy league university. His mother is Jewish; his father is not, thus he has a decidedly WASP surname and according to the author's methods he would have been classified as WASP. With the growing numbers of interfaith and mixed-race children how can anyone draw conclusions about race and religion in the meritocracy or even "IQ" argument? Anecdotally, my son reported that nearly half his classmates at his ivy league were at least one-quarter Jewish (one or more parents or one grandparent). To use last names (in lieu of actual demographic data) to make the conclusion that Jews are being admitted to ivies at higher rates than similarly qualified Asians is irresponsible.Anonymous January 11, 2013 at 4:40 pm GMT
Essentially, the leftist forces in this country are trying to put the squeeze on white gentiles from both directions.
Affirmative action for underachieving minorities to take the place of white applicants.
Meritocracy for highly achieving Asians to push down white applicants, while never mentioning that full meritocracy would push out other minorities as well (that's not politically correct).
The whole thing has become more about political narrative than actual concern for justice. I want you to know that as an Asian man who graduated from Brown, I sympathize with you.Anonymous January 14, 2013 at 3:30 pm GMT
Very interesting article. The case that East Asian students are significantly underrepresented and Jewish students overrepresented at Ivy League schools is persuasive, although not dispositive. The most glaring flaw in the analysis is the heavy reliance on performance on the PSAT (the discussion of the winners of the various Olympiad and Putnam contests has little informational value relevant to admissions, since those winners are the outliers on the tail of the distribution), which is a test that can be prepped for quite easily. Another flaw is the reliance on last names to determine ethnicity, which I doubt works well for Jews, although it probably works reasonably well for East Asians.
Unfortunately, the article is also peppered with (very) thinly supported (and implausible) claims like Asians are better at visuospatial skills, worse at verbal skills, and that the situation is reversed for Jews. This kind of claim strikes me as racial gobbledygook, and at least anecdotally belied if one considers the overrepresentation of Jews among elite chess players, both in the US and worldwide.
In any event, the fundamental point is that the PSAT (as is the case with all standardized tests) is a fixed target that can be studied for. Whether one chooses to put in 100s of hours studying for the PSAT is not, and should not be, the only criterion used for admissions.
I find the relative percentage of East Asians and Jews at schools like MIT (and also Caltech and Berkeley, although obviously those are in part distorted by the heavy concentration of East Asians in California) as compared to HYP as strong evidence that the admissions process at HYP advantages Jews and disadvantages East Asians.
I suspect, though, that the advantages Jews enjoy in the admissions process are unconscious and unintentional, whereas the disadvantages suffered by East Asians are quite conscious and intentional.Anonymous says: Website Show Comment Next New Comment January 21, 2013 at 5:03 am GMT
The graph entitled "Asians Age 18-21 and Elite College Enrollment Trends, 1990-2011″ is misleading. It contrasts percentage of enrolled Asian students vs. the total number of the eligible Asian applicants. Therefore, it led to a flawed argument when comfusing number vs. percentage . For proof, if a similar graph of Hispanic student percentage vs. eligible applicants were drawn, it would appear that they were discriminated against as well. So would be the Black!Anonymous January 24, 2013 at 1:21 am GMT
well, even a fair and objective admission criteria can have devastating consequences. here at IIT, we admit about 1 in 100. this has the same effect on student ethics, career options and so on. in fact, even worse, since IIT is an engineering college, the very definition of engineering in India has now distorted as serving international finance or distant masters in a globalized world. our own development problems remain unattended.
also, the above is a part of the current trend of knowledge concentration, i.e., a belief that only a few universities can impart us "true" knowledge or conduct "true" research.
regs, milind.Thos. January 27, 2013 at 3:39 am GMT
This is a very valuable article. It deals with a subject that has received too little attention. I believe that cultural bias in many cases outweighs the racial bias in the selection program. Time and again, I have seen young people with great potential being selected against because they are culturally different from what the selectors are looking for (often people who are like them culturally). The article's mentioning that students who participated in R.O.T.C., F.F.A. and/or 4H are often passed over is a good illustration.
It was interesting to note that the girl who wrote an essay on how she dealt with being caught in a drug violation found acceptance. I suspect that a student with similar academic qualifications who wrote an essay on the negative aspects of drug use would not be so lucky.
LMMJF January 29, 2013 at 10:36 am GMT
comes news that Yale President Levin's successor will be Peter Salovey, tending to confirm Unz's observations regarding the grossly disproportionate number of Jewish presidents at Ivy League schools.Raymond February 4, 2013 at 4:43 pm GMT
All very interesting but I am among the National Merit Scholars from California who has a not obviously Jewish name despite having two Jewish parents. It was changed in the 1950s due to anti-Semitism and an urge to assimilate. A lot of other names can be German or Jewish for example. I suspect in light of that and intermarriage cases where the mom is Jewish and the dad is not, not to mention a lot of Russian names, you may be undercounting Jews among other things. Although to be fair, you are probably also undercounting some half-Asians given most of those marriages have a white husband and Asian wife.Anonymous February 8, 2013 at 4:47 am GMT
I'm an Asian HYP grad. I applaud this article for being so extremely well researched and insightful. It's an excellent indictment of the arbitrariness and cultural favoritism concentrated in the hands of a very small group of unqualified and ideologically driven admissions officers. And I hasten to add that I am a liberal Democratic, an avid Obama supporter, and a strong proponent of correcting income inequality and combating discrimination in the workplace.
To me, the most compelling exhibit was the one towards the end which showed the % relative representation of enrolled students to highly-qualified students (I wish the article labeled the exhibits). This chart shows that in the Ivies, which administer highly subjective admission criteria, Jews are overrepresented by 3-4x, but in the California schools and MIT, which administer more objective criteria, Jews are overrepresented by only 0-50%, a range that can easily be explained by methodology or randomness.
This single exhibit is unequivocal evidence to me of systematic bias in the Ivy League selection process, with Jews as the primary beneficiary. I tend to agree with the author this this bias is unlikely to be explicit, but likely the result of cultural favoritism, with a decision-making body that is heavily Jewish tending to favor the activities, accomplishments, personalities, etc. of Jewish applicants.
The author has effectively endorsed one of the core tenets of modern liberalism that human beings tend to favor people who look and act like themselves. It's why institutions dominated by white males tend to have pro-white male biases. The only twist here is that the decision-making body in this instance (Ivy League admissions committees) is white-Jewish, not white-Gentile.
So if you're a liberal like me, let's acknowledge that everyone is racist and sexist toward their own group, and what we have here is Jews favoring Jews. We can say that without being anti-semitic, just like we can say that men favor men without being anti-male, or whites favor whites without being anti-white.Anonymous February 14, 2013 at 12:29 am GMT
Just some puzzling statistics: In p. 32, second paragraph, it is mentioned "The Asian ratio is 63% slightly above the white ratio of 61 percent", then in the third paragraph "However, if we separate out the Jewish students, their
ratio turns out to be 435 percent, while the residual ratio for non-Jewish whites drops to just 28 percent, less than half of even the Asian figure", leading to the conclusion that "As a consequence, Asians appear under-represented relative to Jews by a factor of seven, while non-Jewish whites are by far the most under-represented group of all". Not very clear on the analysis!
Let me try to make a guess on the calculation of this statistics ratio: Assume that all groups in NMS will apply, with mA=Asians, mJ=Jews, mW=Whites be the respective numbers in NMS. Suppose that nA, nJ, and nW are those Asians, Jews, and Whites finally admitted. Then if the statistics ratio for G means ((nG)/(mG))/(mG/mNMS), where mNMS is the total number in the NMS, then the ratio will amplify the admission rate (nG/mG) by (mNMS/mG) times and becomes very large or very small for small group size. For example, for a single person group, being admitted will give a ratio as large as mNMS, and a zero for not being admitted. Why can this ratio be used for comparing under-representation between different groups?Al February 23, 2013 at 3:13 pm GMT
Very well. Loved the fact that the author put a lot into reseaching this piece. But i would like to know how many asians who manage to attend this ivy schools end up as nobel leaurets and professors?? This demonstrates the driving force behind the testscore prowess of the asians-financial motivation. The author talks about asians being under-represented in the ivies but even though they manage to attend then what?? do they eventually become eintiens and great nobel leurets or great cheese players. Also what is the stats like for asian poets, novelist, actors.etc Pls focus should be given on improving other non-ivy schools since we have a lots of high SAT test scores than high running universities.Fred February 24, 2013 at 7:11 pm GMT
Look at Nobel prizes, field medals and all kind of prizes and awards that recognize lifetime original academic contributions. Not many asians there yet. Perfect grades or SAT scores does not guarantee creativity, original thinking, intelectual curiosity or leadership. The problem is that those things are hard to measure and very easy to fake in an application.Anonymous February 26, 2013 at 8:09 pm GMT
Loved all the research in the article and I am on board with the idea that moving in the tiger mother direction will kill creativity in young people. And I agree with the observation that our country's top leadership since 1970 or so has been underwhelming and dishonest especially in the financial services industry which draws almost entirely from the Ivies.
However, I am not so convinced that the over representation of Jewish students in the Ivy league is created by intentional bias on the part of Jewish professors or administrators at these institutions. Is it possible that admissions officers select Jewish applicants at such a high rate because they are more likely to actually attend? Once a family of four's income exceeds $160k the net price calculation for a year at Harvard jumps up pretty quickly. By the time you hit annual income of $200k you are looking at $43k/yr or $172k for 4 years. And at the lower income levels, even if a family has to pay just $15k a year, how will they do that if they are struggling to make it as it is? Do they want/does their student want to graduate with $60k worth of debt? Why not choose a great scholarship offer from a state university to pay nothing at all or go to community college for 2 years and then on to the state public institution?
There are many options for top students who can compete at the Ivy level. If I am an admissions officer looking to fill slots left over after minority admissions (ones poor enough to get the education for free and thus to say yes), legacies, athletic recruits, and the few super special candidates, wouldn't I choose those most likely to take me up on the admissions offer and protect my yield number? Might an easy way to get this done be to consult a demographic tool showing net worth by zip code? And to stack the yield odds a little more in my favor might I also choose families with Jewish appearing last names knowing they would be extremely likely to accept my offer since I obviously have recent history to show me that these families say yes to our prices? I think this is a much more plausible explanation then assuming some secret quota in force at these schools.
I am a conservative but I cannot believe Jewish liberals would go that far just to ensure more Jewish liberals attend their institutions or to keep conservative white non Jewish middle income students out. Dollars and cents and the perception a yield number conveys about the desirability of a school are what is at work here in my humble opinion.Anonymous March 1, 2013 at 7:13 pm GMT
There is a very simple solution. There is no legal definition of race. Simply check the "Negro" (or "African-American" or whatever it is called today) box on the application form. You don't look it? Neither do many others, because your ancestry is really mixed. This may get you in. It won't hurt your chances, which are essentially zero before you check that box. At the very least, it will make it harder for the bigots in the admissions office to exercise their bigotry.Doom March 12, 2013 at 8:45 pm GMT
"Look at Nobel prizes, field medals and all kind of prizes and awards that recognize lifetime original academic contributions. Not many asians there yet. Perfect grades or SAT scores does not guarantee creativity, original thinking, intelectual curiosity or leadership. The problem is that those things are hard to measure and very easy to fake in an application."
Last year, 75% of Ph.D candidates where foreign born, most of which were either Indian or Chinese. You should rely on statistics that are more current and relevant.Anonymous March 12, 2013 at 10:18 pm GMT
Wow, another article on how corrupt higher eduation is.
Folks, open your eyes a bit. Online education is growing massively; sharing this growth are websites that write academic papers (even Ph.D. theses) on demands .these websites in toto have nearly as many customers as there are online students.
Harvard is unusual in that they actually banned students for cheating. Every investigation of cheating on campus shows it exists on a massive scale, and reports of half or more of a class cheating are quite common in the news.
The reason for this is simple: administrators care about retention, nothing else. Faculty have long since gotten the message. I've taught in higher education for nearly 25 years now, and I've seen many faculty punished for catching cheaters; not once has there been any reward.
Over 90% of remedial students fail to get a 2-year degree in three years, yet administration sees no issue with talking them into loans that will keep them in debt forever. Admin sees no issue with exploiting the vulnerable for personal gain, of course.
Here's what higher education is today: desperate people take out loans to go to college. They use the money to pay the tuition, and they use the money to buy academic papers because they really aren't there for college, they're there for the checks. Their courses are graded by poorly paid faculty (mostly adjuncts), again paid by those checks. The facutly are watched over by administrators to make sure there is no integrity to the system and again, admin is paid by those checks (in fact, most of the tuition money goes to administrators).
Hmm, what part of this could be changed that would put integrity back into the system?Bobby March 13, 2013 at 1:57 am GMT
I think your sources who claim to be familiar with China are very wrong concerning entrance into Chinese universities, especially those so-called upper tier unis. It is well known amongst most Chinese students who take the gaokao, the all-or-nothing university entrance examination, bribes, guanxi (connections) and just being local, are often better indicators of who will be accepted. Replies: @KA Same and some more in India.
In India it is politics of the gutter. Someone can get to medical school and engineering school even if he or she did not qualify,if scored say 3 points out of 1000 points as long as he or she belonged to lower caste of Hindu. The minimum requirements they have to fulfill is to pass the school leaving examinations with science subjects .A passing level is all that matters . The process then continues (in further education -master , training, post doctoral, and in job and in promotion)
While upper caste Hindu or Christian or Muslim may not be allowed despite scoring 999 out of 1000. It is possible and has happened.
Unfortunately the lower caste has not progressed much. Upper caste Hindus have misused this on many occasions and continue to do do by selling themselves as lower caste with legal loopholes .Muslim or Christians can't do that for they can't claim to be HinduThom March 13, 2013 at 7:04 pm GMT
Ron Unz is a brilliant man. He created software that made him rich, and has written articles on all kinds of subjects. But apparently, Ron shares a problem with a very tiny number of humanity. Ron is one of those oddball characters, that, no matter where the truth leads him, he simply has to express it, regardless of political correctness. He did this in California with the debate on English,etc.
Compared to the administrators of these Ivy League Institutions, Ron is a mental giant, not even near being in the same class as these supposedly important but in reality, worthless beurocrats.Anonymous March 21, 2013 at 4:39 pm GMT
If ten million Gentile whites and Asians changed their surname to Kaplan, Levy, Golden, Goldstein, Goldman, it obviously would throw a monkey wrench into the process of ethnic favoritism.
To paraphrase Unz - the "shared group biases" of Ivy League college admission officers that have "extreme flexibility and subjectivity", does harm white Gentiles and Asians, but only because the process lacks objective, meritocratic decision making, and in its place is a vile form of corrupt cronyism and favoritism.Michael N Moore March 28, 2013 at 7:52 pm GMT
An Asian speaking here, I agree that America isn't a meritocracy, but has it ever been? It seems like this article's falling for the oldest trick in the book - looking back at the "good old days". I'd argue that now more than ever, the barrier to entry is lower than ever, and that every individual can rise to the occasion and innovate for the better. Places like Exeter (my alma mater) aren't just playgrounds for the rich - I'm not extremely wealthy, and neither were my classmates. Most of us were even on financial aid. Don't just point fingers at institutions to account for shortcomings - if you had the stroke of fortune to be born in a nation with such opportunity, with hard work and CREATIVITY and INNOVATION, anything is possible.
Has anyone thought about why the test-prep business has expanded so much? It's to feed into the very same system that you're complaining about. Be the change you wish to see in the world, not a victim of it. To many of the Asians out there, I'd say get over your 4.0 GPA and 2400 SAT score and be unique for once.marc April 7, 2013 at 4:12 pm GMT
To put Unz's findings in social and historical perspective, it is important to understand where Jewish academics come from. The Eastern European Jews who immigrated to Northeast US in the Twentieth Century ran into an immigrant world dominated by Catholics and particularly Irish Catholics. The Irish, who were as "hungry" as the Jews got control over government and its ancillary economic benefits. I wasn't there at the time, but I imagine we Irish did not do much to help Jewish immigrants compared with Catholic immigrants.
One area abandoned by the Catholic Church was public and secular education. The Church formed its own educational Catholic ghetto. Jewish immigrants adopted the public-secular educational world as their own and became strong adherents of education as the key to Americanization. Education became their small piece of turf. The only memorable political conflict between Jews and AfricanAmericans in New York City was over control of the public schools.
Just as the Irish react against affirmative action for non-Irish in government jobs, the descendants of these Jewish immigrants react to the plagiarism of their assimilation plan by the Chinese/Koreans. When you have de facto Irish affirmative action you don't want de jure African American affirmative action. When you have Jewish "meritocracy" you don't want Asian meritocracy.
The result is what you see today. The Irish still have a stranglehold on government related jobs in the Northeast with a smattering of minorities ("New Irish") and the Jews try to protect their secular education turf from the "New Jews". It's just business. Don't take it personally.Anonymous April 7, 2013 at 8:18 pm GMT
All I can say is see a book: "Ivy League Fools and Felons"' by Mack Roth. Lots of them are kids of corrupt people in all fields.
But I disagree that opportunity is being closed off to most Americans. Here in North Dakota I work for a high school graduate, self made trucking millionaire. Five years ago she was a secretary in Iowa. But she got off her butt and went to where the money is circulating. Just my 2 centsRand April 7, 2013 at 10:27 pm GMT
Sorry, but quick correction regarding rankings (and I only have to say this because I go to MIT). Technically, MIT and Caltech are *both* ranked the same. The only reason why Caltech appears on the list before MIT is because it come before it alphabetically to suggest otherwise would be untrue. When you look at individual departments, you'll find that MIT consistently ranks higher than that of Caltech in all engineering disciplines and most scientific disciplines. Also, personally speaking, MIT has a far better humanities program that Caltech (especially in the fields of economics, political science, philosophy, and linguisitics). We do have a number of Pulitizer Prize winners who teach here.
Also generally, in academic circle, MIT is usually viewed with higher regard than Caltech, although that isn't to say Caltech isn't a fantastic school (it really and truly isI loved it there and I wish more people knew more about it)NotAmerican April 15, 2013 at 4:56 pm GMT
One observation about methodology that struck me while reading this:
The Jewish population of universities is being evaluated based on Hillel statistics, with the "Non-Jewish white" population being based on the white population minus the Jewish population.
This can be problematic when you consider that these population are merging at a pretty high rate. (I don't have much information here, but this is from the header of the wikipedia article: "The 1990 National Jewish Population Survey reported an intermarriage rate of 52 percent among American Jews.")
What percentage of partially Jewish students identify as "Jewish" or does Hillel identify as Jewish? If you're taking a population that would have once identified as "white" and now identifying them as Jewish, obviously you'll see some Jewish inflation, and white deflation. And when a large percentage of this population bears the names "Smith", "Jones", "Roberts" etc., you're obviously not going to see a corresponding increase in NMS scores evaluated on the basis of last names.
Of course, I have no idea what methodology Hillel is using, but I wouldn't be surprised to learn that it's an inflated one.NotAmerican April 15, 2013 at 5:01 pm GMT
Thank you Mr. Unz for this provocative article. It isn't the author's first one on Jewish & Asian enrollment at Ivy League colleges. I remember another one, in the 1990s I believe.
According to what I read, less and less American Jews apply for medical school nationwide, and Jewish women are very educated, but it comes also with a low birthrate and high median age. It makes the recent spike in Jewish admissions at Harvard College all the more curious, intriguing.
This month, the NY Times published a list of the highest earners in the hedge fund industry in 2012, and 8 out of 10 were Jewish. Are certain universities aggressively seeking donations from this super rich demographic since the 2000s?
History has a way of repeating itself.Ira April 21, 2013 at 2:12 pm GMT
I'm referring to HYP(Harvard-Yale-Princeton)'s history, during the Gilded Age for example.N. Joseph Potts April 29, 2013 at 7:43 pm GMT
The young American Jew is not like his grandparents. They are just as fun loving and lazy as any other. This is the result of a lack of perceived persecution that use to keep the group together. In the major cities, half of the young people leave the tribe through intermarriage. This is human nature. The Rabbis changed the rules some time ago to define a Jew as coming from the mother, so the Jewish man would marry a Jewish woman, instead of a woman outside of the tribe. Read the Bible. In David's time, the men had an eye for good looking women outside of the tribe(like all men). Now days, the young people just laugh at the Rabbi's words.
Instead of the old folks liberal ideas of race and ethnic divisions, let us change it to go by economic class. According to liberal thought, intelligence is equally distributed throughout all economic classes, so higher education admissions should be by economic class, and not the old divisive ideas of race and ethnic background. After all, affirmative action programs are institutionalized racism and racial profiling. Replies: @KA Yes . You have points . This is one of the fears that drove the Zionist to plan of Israel in 1880 . It was the fear of secular life free from religious persecution and freedom to enjoy life to its fullest in the post industrial non religious Europe guided by enlightenment that drove them embrace the religious ethnic mix concept of statehood.Clark Coleman May 14, 2013 at 4:13 am GMT
These and many other ills would be alleviated if government would stop: (a) banning aptitude tests or even outright discrimination as determinants of employment; (b) subsidizing private institutions such as Harvard; and (c) close down all government schools, starting with state institutions of "higher learning."
I know, pie in the sky. But the author's suggestions by comparison are mere Band-Aids.Anonymous May 23, 2013 at 4:00 am GMT
Great analysis, but pie-in-the-sky prescription, which was presumably just intended to be thought provoking. If you want to know why Harvard would never adopt the author's recommendation, just read what he wrote:
"But if it were explicitly known that the vast majority of Harvard students had merely been winners in the application lottery, top businesses would begin to cast a much wider net in their employment outreach, and while the average Harvard student would probably be academically stronger than the average graduate of a state college, the gap would no longer be seen as so enormous, with individuals being judged more on their own merits and actual achievements. A Harvard student who graduated magna cum laude would surely have many doors open before him, but not one who graduated in the bottom half of his class."
I wonder why Harvard officials would desire this outcome?foo May 31, 2013 at 5:31 am GMT
So a lot of ivy league presidents with Jewish-sounding names somehow influence admissions staff who may not have Jewish-sounding names to favor undeserving applicants because they also have Jewish-sounding names? And this is because of some secret ethnic pride thing going on? And nobody's leaked this conspiracy to the outside world until our whistle blowing author? The guy's a nut job.Anonymous July 27, 2013 at 5:04 pm GMT
Benj Pollock says: [...stuf...]
What a weird ad-hominem attack! One of the weakest I have seen..you should really be calling the author an "anti-semite" shouldn't you ?NB says: Website Show Comment Next New Comment December 5, 2013 at 7:52 pm GMT
All of your statistics are highly suspect due to the enormous, and rapid annual increase in Jewish intermarriage. I do not have the statistics, but over many years, it certainly appears that Jewish men are far more likely to intermarry than Jewish women (the lure of the antithesis to their Jewish mother??) and to complicate matters further, Jewish men seem to have a predilection for Asian women, at least in the greater NY Metro Area. But that still does not represent the majority of Jewish men marrying Christians. QED. More Jewish last names, for children who are DNA wise only half Jewish than non Jewish names for the intermarried. And if one wanted to get really specific, the rapidly rising intermarriage is diluting the "Jewish" genetic pool's previously demonstrable intelligence superiority., strengthened by the fact that most couples use the Jewish fathers last name.
These observations are in no way associated with how the various Jewish denominations define 'Jewish"
Methinks the statistics are highly flawed.Walter Sobchak December 11, 2013 at 3:43 am GMT
I have posted a critique of Unz's article here: http://alum.mit.edu/www/nurit
Columbia statistician Andrew Gelman discusses it here: http://andrewgelman.com/2013/10/22/ivy-jew-update/
In short: Unz substantially overestimated the percentage of Jews at Harvard while grossly underestimating the percentage of Jews among high academic achievers, when, in fact, there is no discrepancy.
In addition, Unz's arguments have proven to be untenable in light of a recent survey of incoming Harvard freshmen conducted by The Harvard Crimson, which found that students who identified as Jewish reported a mean SAT score of 2289, 56 points higher than the average SAT score of white respondents.
I have a couple of thoughts about this article:
First. I was thrilled to see your advocacy of admissions by lottery. I have advocated such a plan on various websites that I participate in, but you have written the first major article advocating it that I have seen. Congratulations.
Just a small quibble with your plan, I would not allow the schools any running room for any alternatives to the lottery. They have not demonstrated any willingness to administer such a system fairly. After a few years of pure lottery it would be time to evaluate it and see if they should be allowed any leeway, but I wouldn't allow any variation before that.
I would hypothesize that one effect of a lottery admissions plan would be a return to more stringent grading in the class rooms. It would be useful to the faculty to weed out the poor performers more quickly, and the students might have less of an attitude of entitlement.
Second, I am glad that you raised the issue of corruption of the admissions staffs. It would be a new chapter in human history if there was no straight out bribe taking of by functionaries in their positions. My guess is that the bag men are the "high priced consultants". Pay them a years worth of tuition money and a sufficient amount will flow to the right places to get your kid in to wherever you want him to go.
Third, three observations about Jewish Students.
First, Jews are subject to mean reversion just like everybody else.
Second, the kids in the millennial generation were, for the most part, born into comfortable middle class and upper class homes. The simply do not have the drive that their immigrant grandparents and great-grandparents had. I see this in my own family. My wife and I had immigrant parents, and we were pretty driven academically (6 degrees between us). Our kids, who are just as bright as we were, did not show that same edge, and it was quite frustrating to us. None of them have gone to a graduate or professional school. They are all working and are happy, but driven they aren't.
Third, Hillel's numbers of Jewish students on their website should be taken cum grano salis. All three of our kids went to Northwestern U. (Evanston, IL) which Hillel claimed was 20% Jewish. Based on our personal observations of kids in their dorms and among their friends, I think the number is probably 10% or less.
Finally, the side bar on Paying Tuition to a Hedge Fund. I too am frustrated with the current situation among the wealthy institutions. I think that it deserves a lot more attention from policy makers than it has received. The Universities have received massive benefits from the government (Federal and state) - not just tax exemptions, but grants for research and to students, subsidized loans, tax deductions for contributions, and on, and on. They have responded to this largess by raising salaries, hiring more administrators, spending billions on construction, and continually raising tuitions far faster than the rate of inflation. I really do not think the tax payers should be carrying this much of a burden at a time when deficits are mounting without limit.
Henry VIII solved a similar problem by confiscating assets. We have constitutional limits on that sort of activity, but I think there a lot of constitutional steps that should be considered. Here a few:
1. There is ample reason to tax the the investment gains of the endowments as "unrelated business taxable income" (UBTI, see IRS Pub 598 and IRC §§ 511-515) defined as income from a business conducted by an exempt organization that is not substantially related to the performance of its exempt purpose. If they do not want to pay tax on their investments, they should purchase treasuries and municipals, and hold them to maturity.
2. The definition of an exempt organization could be narrowed to exclude schools that charge tuition. Charging $50,000/yr and sitting on 30G$ of assets looks a lot more like a business than a charity.
3. Donations to overly rich institutions should be non deductible to the donors. Overly rich should be defined in terms of working capital needs and reserves for depreciation of physical assets.jholloway August 23, 2014 at 4:40 am GMT
Is the proposed mechanism that Jewish university presidents create a bias in the admissions department?
That could be tested by comparing Jewish student percentages between schools with Christian and Jewish presidents. If Christian presidents produce student bodies with a high proportion of Jews, then Jewish ethnocentrism is not the cause. (We'd have to find a way to control for presidents' politics.)
If admissions departments are discriminating in favor of liberals, that will boost the proportion of all liberals, including many Jews, but it will be political discrimination, not ethnic discrimination. (Both are bad, but we should be accurate.)
Liberals see a discrepancy in ethnic outcomes and consider it proof of ethnic discrimination. Are we doing the same thing?KA October 12, 2014 at 2:34 pm GMT KA October 12, 2014 at 2:41 pm GMT
After Russian emancipation, the Jews from Pale settlement spread out and took up jobs in government services, secured admissions in technical and medical schools, and established positions in trade in just two decades. Then they started interconnecting and networking more aggressively to eliminate competition and deny the non-Jews the opportunities that the non Jews rightfully claimed. This pattern was also evident in Germany after 1880 and in Poland between interwars .
The anti-Jewish sentiment seen in pre revolutionary Russia was the product of this ethnic exclusivisity and of the tremendous in-group behaviors .@Ira The young American Jew is not like his grandparents. They are just as fun loving and lazy as any other. This is the result of a lack of perceived persecution that use to keep the group together. In the major cities, half of the young people leave the tribe through intermarriage. This is human nature. The Rabbis changed the rules some time ago to define a Jew as coming from the mother, so the Jewish man would marry a Jewish woman, instead of a woman outside of the tribe. Read the Bible. In David's time, the men had an eye for good looking women outside of the tribe(like all men). Now days, the young people just laugh at the Rabbi's words.KA October 12, 2014 at 2:59 pm GMT
Instead of the old folks liberal ideas of race and ethnic divisions, let us change it to go by economic class. According to liberal thought, intelligence is equally distributed throughout all economic classes, so higher education admissions should be by economic class, and not the old divisive ideas of race and ethnic background. After all, affirmative action programs are institutionalized racism and racial profiling.
Yes . You have points . This is one of the fears that drove the Zionist to plan of Israel in 1880 . It was the fear of secular life free from religious persecution and freedom to enjoy life to its fullest in the post industrial non religious Europe guided by enlightenment that drove them embrace the religious ethnic mix concept of statehood.
@Anonymous I think your sources who claim to be familiar with China are very wrong concerning entrance into Chinese universities, especially those so-called upper tier unis. It is well known amongst most Chinese students who take the gaokao, the all-or-nothing university entrance examination, bribes, guanxi (connections) and just being local, are often better indicators of who will be accepted.Ivy October 16, 2014 at 3:20 am GMT
Same and some more in India. In India it is politics of the gutter. Someone can get to medical school and engineering school even if he or she did not qualify, if scored say 3 points out of 1000 points as long as he or she belonged to lower caste of Hindu. The minimum requirements they have to fulfill is to pass the school leaving examinations with science subjects .A passing level is all that matters . The process then continues (in further education -master , training, post doctoral, and in job and in promotion)
While upper caste Hindu or Christian or Muslim may not be allowed despite scoring 999 out of 1000. It is possible and has happened. Unfortunately the lower caste has not progressed much. Upper caste Hindus have misused this on many occasions and continue to do do by selling themselves as lower caste with legal loopholes .Muslim or Christians can't do that for they can't claim to be HinduAnonymous November 26, 2014 at 5:06 pm GMT
Jews are really good at networking and in-group activity. They have centuries of practice, and lived a meritocratic existence of self-sorting in the Pale and elsewhere.
That is evident to all who look.
Other groups have different approaches, and different organizational or affiliation bonds, based on their history, culture and other factors.
NE Asians share some traits, and both value education as a way to improve themselves and to some extent their groups.
S Asians will demonstrate their own approach, focusing heavily on STEM.
Expect demographics to win out, given 2.5B Asians versus a smaller NAM or NE European-base populace.Truth December 25, 2014 at 4:04 pm GMT
Thanks for the informative article. Your proposal sounds reasonable. Another option would be to attempt to vastly decrease the significance of these elite private schools. Why should we allow undemocratic little fiefdoms to largely control entry into our country's ruling class? It would probably be considerably more fair, more transparent and more efficient to pour a lot of resources into our public universities. If Berkeley, Michigan, UVA, UMass, etc. were completely free, for instanceor if they provided students with living expenses as well as free tuition, the quality of their students would conceivably surpass that of the Ivy League's, and over time the importance and prestige of Harvard, Stanford, etc. would diminish. Instead, we are subsidizing students at elite private colleges more than those at public collegesan absurd state of affairs (see this article, whose author is a bit of an ideologue but who is right on this issue: http://www.csmonitor.com/Business/Robert-Reich/2014/1014/How-the-government-spends-more-per-student-at-elite-private-universities-than-public ).Anonymous March 11, 2015 at 3:34 am GMT
Mr. Unz; thank you for the long, informational and scholarly article. I read the whole thing, and from Sailer I am familiar with your reputation as a certified genius. I must admit however, after the 5-10,000 words you had written, I was a bit shocked that your answer to how to improve elite University enrollment, was to FLIP A FIGURATIVE COIN.
I expected some chart with differential equations that I would have to consult my much more intelligent brother, the electrical engineer to explain to me. Not that it does not make a lot of sense.
The issue with your solution is that you go from a three class university:
1) Legacy Admits
2) Non athletic, black admits
3) everyone else
to a much-more rigid, two class university:
1) academic admits
2) coin-flip admits
One tier being one of the smartest 15-18 year olds in the world, the other being "somewhat better than good student at Kansas State."
Talk about a hierarchy!Joe Franklin August 20, 2015 at 8:25 pm GMT
My brother works at a little ivy league school. Well endowed because the parents Dun and Bradstreet reports are at the top of the selection sheets with parents jobs also. Extra points for finance and government jobs at executive levels.
This article was excellent and reinforced everything he has told me over the years. One thing he did mention i would like to add. Asians, which for years were their choice for filling minority quotas, are horrible when it comes to supporting the alma mater financially during the fund drives. This information was confirmed by several other schools in the area when they tried a multi-school drive in the far east and south east asia to canvas funds and returned with a pitiful sum.Joe Franklin August 29, 2015 at 4:42 pm GMT
Diversity is a scheme that is the opposite of a meritocracy. Diversity is a national victim cult that generally demonizes gentiles, and more specifically demonizes people that conform to a jewish concocted profile of a nazi.
Why would anyone use the word diversity in the same sentence as the word meritocracy?Part White, Part Native September 1, 2015 at 6:45 am GMT
"Are elite university admissions based on meritocracy and diversity as claimed?" Why would anybody claiming to be intelligent include meritocracy and diversity in the same sentence?Gandydancer December 26, 2015 at 1:43 am GMT
@Sean Gillhoolley Harvard is a university, much like Princeton and Yale, that continues based on its reputation, something that was earned in the past. When the present catches up to them people will regard them as nepotistic cauldrons of corruption.
Look at the financial disaster that befell the USA and much of the globe back in 2008. Its genesis can be found in the clever minds of those coming out of their business schools (and, oddly enough, their Physics programs as well). They are teaching the elite how to drain all value from American companies, as the rich plan their move to China, the new land of opportunity. When 1% of the population controls such a huge portion of the wealth, patriotism becomes a loadstone to them. The elite are global. Places like Harvard cater to them, help train them to rule the world....but first they must remake it.
I agree, common people would never think of derivatives , nor make loans based on speculation .
"Tiffany Wang['s] SAT scores were over 100 points above the Wesleyan average, and she ranked as a National Merit Scholarship semifinalist "
"Julianna Bentes her SAT scores were somewhat higher than Tiffany's "
Did Ms. Wang underperform on her SATs? NMS semifinalist status depends purely on the score on a very SAT-like test being at a 99.5 percentile level, as I understand it (and I was one, albeit a very long time ago) and I gather from the above that her SAT scores did not correspond to the PSAT one. That is, merely " 100 points above the Wesleyan average" doesn't seem all that exceptional. Or am I wrong?
Mr. Unz several times conflates NMS semifinalist status with being a top student. Which I most definitely was not. It's rather an IQ test. As was the SAT.
marknesop.wordpress.comPatient Observer , July 23, 2016 at 7:07 pmAn interesting article on John McCain. I disagree with the contention that McCain hid knowledge that many American POWs were left behind (undoubtedly some voluntarily choose to remain behind but not hundreds ). However, the article touched on some ideas that rang true:
Today when we consider the major countries of the world we see that in many cases the official leaders are also the leaders in actuality: Vladimir Putin calls the shots in Russia, Xi Jinping and his top Politburo colleagues do the same in China, and so forth. However, in America and in some other Western countries, this seems to be less and less the case, with top national figures merely being attractive front-men selected for their popular appeal and their political malleability, a development that may eventually have dire consequences for the nations they lead. As an extreme example, a drunken Boris Yeltsin freely allowed the looting of Russia's entire national wealth by the handful of oligarchs who pulled his strings, and the result was the total impoverishment of the Russian people and a demographic collapse almost unprecedented in modern peacetime history.
An obvious problem with installing puppet rulers is the risk that they will attempt to cut their strings, much like Putin soon outmaneuvered and exiled his oligarch patron Boris Berezovsky.
One means of minimizing such risk is to select puppets who are so deeply compromised that they can never break free, knowing that the political self-destruct charges buried deep within their pasts could easily be triggered if they sought independence. I have sometimes joked with my friends that perhaps the best career move for an ambitious young politician would be to secretly commit some monstrous crime and then make sure that the hard evidence of his guilt ended up in the hands of certain powerful people, thereby assuring his rapid political rise.
The gist is that elite need a kill switch on their front men (and women).
Cortes , July 24, 2016 at 11:16 amSeems to be a series of pieces dealing with Vietnam POWs: the following linked item was interesting and provided a plausible explanation: that the US failed to pay up agreed on reparationsmarknesop , July 24, 2016 at 12:29 pm
http://www.unz.com/runz/american-pravda-relying-upon-maoist-professors-of-cultural-studies/Remarkable and shocking. Wheels within wheels this is the first time I have ever seen McCain's father connected with the infamous Board of Inquiry which cleared Israel in that state's attack on USS LIBERTY during Israel's seizure of the Golan Heights.Cortes , July 25, 2016 at 9:08 amAnother stunning article in which the author makes reference to his recent acquisition of what he considers to be a reliably authentic audio file of POW McCain's broadcasts from captivity. Dynamite stuff. The conclusion regarding aspiring untenured historians is quite downbeat:marknesop , July 25, 2016 at 10:40 am
http://www.unz.com/runz/american-pravda-will-there-be-a-spotlight-sequel-to-the-killing-fields/Also remarkable; fantastic. It's hard to believe, and a testament to the boldness of Washington dog-and-pony shows, because this must have been well-known in insider circles in Washington anything so damning which was not ruthlessly and professionally suppressed and simply never allowed to become part of a national discussion would surely have been stumbled upon before now. Land of the Cover-Up.
yalensis , July 25, 2016 at 3:40 pmSo, McCain was Hanoi Jack broadcasting from the Hanoi Hilton?
Dec 31, 2016 | economistsview.typepad.comJohnH : December 31, 2016 at 04:38 PMIronic isn't it? "Why didn't ... exhibit the same restraint in his role as a public intellectual?likbez -> JohnH...
The answer, I suspect, is that he got caught up in an essentially political role. Milton Friedman the great economist could and did acknowledge ambiguity. But Milton Friedman the great champion of free markets was expected to preach the true faith, not give voice to doubts. And he ended up playing the role his followers expected. As a result, over time the refreshing iconoclasm of his early career hardened into a rigid defense of what had become the new orthodoxy."
Krugman should have stuck to economics...Yes, this is pretty nasty verdict for Krugman too.
But, in reality, Milton Friedman was an intellectual prostitute of financial oligarchy most of his long life, starting from his days in Mont Pelerin Society ( https://en.wikipedia.org/wiki/Mont_Pelerin_Society) , where he was one of the founders.
So, if the period when he was a good econometrician exists it is limited to pre-war and war years. As he was born in 1912, he was just 33 in 1945. His "A Theory of the Consumption Function" was published in 1957. And "A Monetary History of the United States, 18671960" in 1963, when he was already completely crooked.
Mont Pelerin Society was founded in 1947 with the explicit political goal of being hatching place for neoliberal ideology as alternative to communist ideology. He served as a President of this Society from 1970 to 1972.
Capitalism and Freedom that many consider to be neoliberal manifesto similar to Marx and Engels "Manifesto of the Communist Party" was published in 1962.
So what Krugnam is saying is a myth. And he is not an impartial observer. He is a neoliberal himself. I still remember Krugman despicable attacks on John Kenneth Galbraith and his unhealthy fascination with the usage of differential equations in economic modeling, the epitome of mathiness.
Dec 31, 2016 | economistsview.typepad.comJohnH : December 31, 2016 at 04:38 PMIronic isn't it? "Why didn't ... exhibit the same restraint in his role as a public intellectual?likbez -> JohnH...
The answer, I suspect, is that he got caught up in an essentially political role. Milton Friedman the great economist could and did acknowledge ambiguity. But Milton Friedman the great champion of free markets was expected to preach the true faith, not give voice to doubts. And he ended up playing the role his followers expected. As a result, over time the refreshing iconoclasm of his early career hardened into a rigid defense of what had become the new orthodoxy."
Krugman should have stuck to economics...Yes, this is pretty nasty verdict for Krugman too.
But, in reality, Milton Friedman was an intellectual prostitute of financial oligarchy most of his long life, starting from his days in Mont Pelerin Society ( https://en.wikipedia.org/wiki/Mont_Pelerin_Society) , where he was one of the founders.
So, if the period when he was a good econometrician exists it is limited to pre-war and war years. As he was born in 1912, he was just 33 in 1945. His "A Theory of the Consumption Function" was published in 1957. And "A Monetary History of the United States, 18671960" in 1963, when he was already completely crooked.
Mont Pelerin Society was founded in 1947 with the explicit political goal of being hatching place for neoliberal ideology as alternative to communist ideology. He served as a President of this Society from 1970 to 1972.
Capitalism and Freedom that many consider to be neoliberal manifesto similar to Marx and Engels "Manifesto of the Communist Party" was published in 1962.
So what Krugnam is saying is a myth. And he is not an impartial observer. He is a neoliberal himself. I still remember Krugman despicable attacks on John Kenneth Galbraith and his unhealthy fascination with the usage of differential equations in economic modeling, the epitome of mathiness.
Dec 31, 2016 | economistsview.typepad.comPaul Mathis -> anne... , December 31, 2016 at 06:48 PMI have two problems with Prof. K:yuan -> Paul Mathis... , December 31, 2016 at 06:56 PM
1. His refusal to acknowledge the central role of consumption in our economy. As Keynes said, ""Consumption - to repeat the obvious - is the sole end and object of all economic activity." The General Theory, p. 104.
And Adam Smith agreed: "Consumption is the sole end and purpose of all production." The Wealth of Nations, Book IV Chapter VIII, v. ii, p. 660, para. 49.
2. Krugman's refusal to endorse fiscal stimulus unless the economy is at ZLB. That is not only anti-Keynesian, it plays directly into the hands of the debt fear mongers. (Krugman is also worried about the debt.)"Krugman's refusal to endorse fiscal stimulus unless the economy is at ZLB."anne -> Paul Mathis... , December 31, 2016 at 06:57 PM
That is a strawman, and a bad one.
PS: My criticism of Krugman is far more fundamental. I do not believe the profit motive is superior to the mutual benefit motive when it comes to organizing economies.Important criticisms.anne -> Paul Mathis... , December 31, 2016 at 07:00 PMhttps://www.marxists.org/reference/archive/smith-adam/works/wealth-of-nations/book04/ch08.htmanne -> Paul Mathis... , December 31, 2016 at 07:07 PM
An Inquiry into the Nature and Causes of The Wealth of Nations
By Adam Smith
On Systems of Political Economy
Conclusion of the Mercantile System
Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer. The maxim is so perfectly self evident that it would be absurd to attempt to prove it. But in the mercantile system the interest of the consumer is almost constantly sacrificed to that of the producer; and it seems to consider production, and not consumption, as the ultimate end and object of all industry and commerce.https://www.marxists.org/reference/subject/economics/keynes/general-theory/ch08.htmanne -> Paul Mathis... , -1
The General Theory of Employment, Interest and Money
By John Maynard Keynes
The Propensity to Consume: The Objective Factors
Consumption - to repeat the obvious - is the sole end and object of all economic activity. Opportunities for employment are necessarily limited by the extent of aggregate demand. Aggregate demand can be derived only from present consumption or from present provision for future consumption. The consumption for which we can profitably provide in advance cannot be pushed indefinitely into the future. We cannot, as a community, provide for future consumption by financial expedients but only by current physical output. In so far as our social and business organisation separates financial provision for the future from physical provision for the future so that efforts to secure the former do not necessarily carry the latter with them, financial prudence will be liable to diminish aggregate demand and thus impair well-being, as there are many examples to testify. The greater, moreover, the consumption for which we have provided in advance, the more difficult it is to find something further to provide for in advance, and the greater our dependence on present consumption as a source of demand. Yet the larger our incomes, the greater, unfortunately, is the margin between our incomes and our consumption. So, failing some novel expedient, there is, as we shall see, no answer to the riddle, except that there must be sufficient unemployment to keep us so poor that our consumption falls short of our income by no more than the equivalent of the physical provision for future consumption which it pays to produce to-day.Krugman's refusal to endorse fiscal stimulus unless the economy is at zero lower bound. That is not only anti-Keynesian, it plays directly into the hands of the debt fear mongers. (Krugman is also worried about the debt.)
[ Only correct to a degree, economic weakness is recognized. ]
Dec 31, 2016 | economistsview.typepad.comMathew Kahn:2007 Krugman on Milton Friedman : As you read this direct Paul Krugman quote, do y ou hear this song in the background.
"What's odd about Friedman's absolutism on the virtues of markets and the vices of government is that in his work as an economist's economist he was actually a model of restraint. As I pointed out earlier, he made great contributions to economic theory by emphasizing the role of individual rationality-but unlike some of his colleagues, he knew where to stop. Why didn't he exhibit the same restraint in his role as a public intellectual?
The answer, I suspect, is that he got caught up in an essentially political role. Milton Friedman the great economist could and did acknowledge ambiguity. But Milton Friedman the great champion of free markets was expected to preach the true faith, not give voice to doubts. And he ended up playing the role his followers expected. As a result, over time the refreshing iconoclasm of his early career hardened into a rigid defense of what had become the new orthodoxy.
In the long run, great men are remembered for their strengths, not their weaknesses, and Milton Friedman was a very great man indeed-a man of intellectual courage who was one of the most important economic thinkers of all time, and possibly the most brilliant communicator of economic ideas to the general public that ever lived. But there's a good case for arguing that Friedmanism, in the end, went too far, both as a doctrine and in its practical applications. When Friedman was beginning his career as a public intellectual, the times were ripe for a counterreformation against Keynesianism and all that went with it. But what the world needs now, I'd argue, is a counter-counterreformation."
Paul Mathis : , December 31, 2016 at 02:26 PMCounter-reformation? Not exactly.Dan Berg -> Paul Mathis... , December 31, 2016 at 02:38 PM
In an interview with Public Broadcasting System on Oct. 1, 2000, Dr. Milton Friedman said, "Let me emphasize [that] I think Keynes was a great economist. I think his particular theory in The General Theory of Employment, Interest, and Money is a fascinating theory. It's a right kind of a theory. It's one which says a lot by using only a little. So it's a theory that has great potentiality."
Brilliant economist? Not exactly. For monetarists who believe as Dr. Friedman did that "inflation is always and everywhere a monetary phenomenon," the nearly $4 trillion added to the money supply by the Fed since 2008 should have produced raging hyper-inflation. For Friedman, the answer was not debatable: "A steady rate of monetary growth at a moderate level can provide a framework under which a country can have little inflation and much growth." The Counter-Revolution in Monetary Theory (1970).$4 T was not "added to the money supply"anne -> Dan Berg ... , December 31, 2016 at 03:35 PM
For Krugman, this is called being hoisted by one's own petard.https://fred.stlouisfed.org/graph/?g=2VX3 :anne -> Paul Mathis... , December 31, 2016 at 02:44 PM
this graph, which should have been labelled but was not, depicts the monetary base from October 2012 to December 2015 for reasons that are a mystery to me.https://fred.stlouisfed.org/graph/?g=cfmnanne -> anne... , December 31, 2016 at 02:47 PM
January 15, 2016
Adjusted Monetary Base, 2000-2016
January 15, 2016
Adjusted Monetary Base, 2008-2016About $3 trillion was added to the monetary base between 2008 and the beginning of 2015.Dan Berg -> anne... , December 31, 2016 at 05:05 PMso why are you depicting the monetary base if they are such a mystery; and without labels?anne -> anne... , December 31, 2016 at 05:18 PMPerfectly described and drawn graphs depicting more than a $3 trillion increase in the monetary base between 2008 and 2015. Nice and simple as that:anne -> Paul Mathis... , December 31, 2016 at 03:44 PM
January 15, 2016
Adjusted Monetary Base, 2000-2016
January 15, 2016
Adjusted Monetary Base, 2008-2016
Tra la, tra la.http://krugman.blogs.nytimes.com/2013/08/08/milton-friedman-unperson/anne -> Paul Mathis... , December 31, 2016 at 05:26 PM
August 8, 2013
Milton Friedman, Unperson
By Paul Krugman
So Friedman has vanished from the policy scene - so much so that I suspect that a few decades from now, historians of economic thought will regard him as little more than an extended footnote.Do write further on this matter when possible.anne : , December 31, 2016 at 02:39 PMhttp://www.nybooks.com/articles/19857anne -> anne... , December 31, 2016 at 03:00 PM
February 15, 2007
Who Was Milton Friedman?
By Paul Krugman - New York Review of Books
The history of economic thought in the twentieth century is a bit like the history of Christianity in the sixteenth century. Until John Maynard Keynes published The General Theory of Employment, Interest, and Money in 1936, economics-at least in the English-speaking world-was completely dominated by free-market orthodoxy. Heresies would occasionally pop up, but they were always suppressed. Classical economics, wrote Keynes in 1936, "conquered England as completely as the Holy Inquisition conquered Spain." And classical economics said that the answer to almost all problems was to let the forces of supply and demand do their job.
But classical economics offered neither explanations nor solutions for the Great Depression. By the middle of the 1930s, the challenges to orthodoxy could no longer be contained. Keynes played the role of Martin Luther, providing the intellectual rigor needed to make heresy respectable. Although Keynes was by no means a leftist-he came to save capitalism, not to bury it-his theory said that free markets could not be counted on to provide full employment, creating a new rationale for large-scale government intervention in the economy.
Keynesianism was a great reformation of economic thought. It was followed, inevitably, by a counter-reformation. A number of economists played important roles in the great revival of classical economics between 1950 and 2000, but none was as influential as Milton Friedman. If Keynes was Luther, Friedman was Ignatius of Loyola, founder of the Jesuits. And like the Jesuits, Friedman's followers have acted as a sort of disciplined army of the faithful, spearheading a broad, but incomplete, rollback of Keynesian heresy. By the century's end, classical economics had regained much though by no means all of its former dominion, and Friedman deserves much of the credit.
I don't want to push the religious analogy too far. Economic theory at least aspires to be science, not theology; it is concerned with earth, not heaven. Keynesian theory initially prevailed because it did a far better job than classical orthodoxy of making sense of the world around us, and Friedman's critique of Keynes became so influential largely because he correctly identified Keynesianism's weak points. And just to be clear: although this essay argues that Friedman was wrong on some issues, and sometimes seemed less than honest with his readers, I regard him as a great economist and a great man....http://krugman.blogs.nytimes.com/2009/03/02/friedman-and-schwartz-were-wrong/anne -> anne... , December 31, 2016 at 03:17 PM
March 2, 2009
Friedman and Schwartz Were Wrong
By Paul Krugman
It's one of Ben Bernanke's most memorable quotes: at a conference honoring Milton Friedman on his 90th birthday, he said: *
"Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."
He was referring to the Friedman-Schwartz argument that the Fed could have prevented the Great Depression if only it has been more aggressive in countering the fall in the money supply. This argument later mutated into the claim that the Fed caused the Depression, but its original version still packed a strong punch. Basically, it implied that no fundamental reforms of the economy were necessary; all it takes to avoid depressions is for central banks to do their job.
But can we say that recent events appear to disprove that claim? (So did Japan's experience in the 1990s, but that lesson failed to sink in.) What we have now is a Fed that is determined not to "do it again." It has been very aggressive about monetary expansion. Here's one measure of that aggressiveness, banks' excess reserves:
[Bank excess reserves, 1990-2009]
And yet the world economy is still falling off a cliff.
Preventing depressions, it turns out, is a lot harder than we were taught.
January 30, 2016
Excess Reserves of Depository Institutions, 1990-2009
Dec 31, 2016 | economistsview.typepad.com
To belabor what should be obvious: either the wealthy care about having more money or they don't. If lower marginal tax rates are an incentive to produce more, the prospect of personal gain is an incentive to engage in corrupt practices. You can't go all Ayn Rand/Gordon Gekko on the importance of greed as a motivator while claiming that wealth insulates ... from temptation. ...
And this is telling us something significant: namely, that supply-side economic theory is and always was a sham. It was never about the incentives; it was just another excuse to make the rich richer.Anomalous Cowherd : December 29, 2016 at 11:35 AMIn one sentence, you still can't beat John Kenneth Galbraith's assessment: "The modern conservative is engaged in one of man's oldest exercises in moral philosophy: that is, the search for a superior moral justification for selfishness."DrDick -> Anomalous Cowherd... , December 29, 2016 at 12:31 PM
Nothing is more admirable than the fortitude with which millionaires tolerate the disadvantages of their wealth. -- Nero WolfeYou need to know nothing else to understand the entirety of the conservative edifice.JohnH :"choosing a cabinet of billionaires, because rich men are incorruptible"...kind of like showering ZIRP on the Wall Street banking cartel and letting them how to ration credit to the rest of economy...mostly their wealthy clientele, who use it for stock buy-backs and asset speculation.Gibbon1 : , December 29, 2016 at 12:29 PM
Of course, 'liberal' economists see nothing wrong with trickle down, supply side economics, as long as it's the Wall Street banking cartel who's in charge of it...Why do we need Krugman to tell us this?DrDick -> Gibbon1... , -1*We* do not, but our pandering press does and I think that is Krugman's intended target.JohnH -> pgl...Stiglitz: "I've always said that current monetary policy is not going to work because quantitative easing is based on a variant of trickle-down economics. The lower interest rates have led to a stock-market bubble to increases in stock-market prices and huge increases in wealth. But relatively little of that's been translated into increased and broad consumer spending."yuan -> JohnH...
But pgl and many other '[neo[liberal' economists just can't get enough of the trickle down monetary policy...all the while they vehemently condemn trickle down tax policy.and few liberal economists have been more skeptical of QE's economic impact than Krugman.ilsm :
PS: bernie, please save me from your bros.You all think Trump can do worse than the sitting cabal adding $660B from Sep 2015 to the federal debt quietly keeping the economy going for the incumbent party?yuan -> ilsm...
The losers think the winners are as crooked as they!when we can borrow over the long-term at 3% and have truly massive infrastructure and clean energy needs we should be borrowing like military Keynesian republicans...
Dec 31, 2016 | www.nytimes.com
Chris G said...
And this is telling us something significant: namely, that supply-side economic theory is and always was a sham.
Urgh. That it is and always a sham is irrelevant. It is THE NARRATIVE that matters! They had a compelling story and they stuck to it. That's how you sell politics in this country.
Trump told a significant fraction of the population that he understood their problems and that he would fix them. He told enough people what they wanted to hear - and did so with a convincing tone - that he got himself elected. That's how you win. You sell people on your vision. If you tell a good story most people aren't going to reality-check it. Sad but true.
On the importance of narrative: Drew Westen, "What Happened to Obama?" - http://www.nytimes.com/2011/08/07/opinion/sunday/what-happened-to-obamas-passion.html
Dec 29, 2016 | economistsview.typepad.comPeter K. : All of the Democratic primary voters somehow believed Hillary Clinton would make a better candidate against Trump than Sanders would.
And now we're stuck with Trump for at least 4 years.
As Saul Bellow once said, "a great deal of intelligence can be invested in ignorance when the need for illusion is strong". Reply Wednesday, December 28, 2016 at 07:09 PM Peter K. -> Peter K.... , December 28, 2016 at 07:11 PMSeriously why should we ever believe these neoliberal centrist Democrats again?likbez -> Peter K.... , December 28, 2016 at 10:09 PM
Why when they were so very, very wrong!
Krugman ASSURED us Clinton was a great candidate who would easily win.Krugman was clearly a neoliberal propagandist on payroll. He should not be even discussed in this context because his columns were so clearly partisan.Cal -> likbez... , -1
As for "Centrist Democrats" (aka Clinton wing of the party) their power is that you have nowhere to go: they rule the Democratic Party and the two party system guarantees that any third party will be either squashed or assimilated.
In no way they need that you believe them: being nowhere to go is enough.
Remember what happened with Sanders supporters during the convention? They were silenced. And then eliminated. That's how this system works.Krugman is a polarizing agent here in RiverCity...to our collective loss IMHO...as you know I don't have the Nobel.Egmont Kakarot-Handtke : , -1
But you might be giving him some hope with that "was"? Clearly he does not need $.
He is writing for our....yes, American, maybe even Global citizenship, which he thinks is in peril. It is. Otherwise I'd be out fishing.
And you? What's in it for you? Are you familiar with the history of political party systems that transition in and out of 2 parties? Is this little forum an example of the 2 party system: pro/con Krugman?
Americans believe crazy things, yet they are outdone by economists
Comment on Catherine Rampell on 'Americans - especially but not exclusively Trump voters - believe crazy, wrong things'#1
Americans are NOT special. Since more than 5000 years people believe things JUST BECAUSE they are absurd - in accordance with Tertullian's famous dictum "credo quia absurdum".#2
As a matter of principle, almost everybody has the right to his own opinion no matter how stupid, crazy, wrong, or absurd; the only exception are scientists. The ancient Greeks started science with the distinction between doxa (= opinion) and episteme (= knowledge). Scientific knowledge is well-defined by material and formal consistency. Knowledge is established by proof, belief or opinion counts for nothing.
Opinion is the currency in the political sphere, knowledge is the currency is the scientific sphere. It is extremely important to keep both spheres separate. Since the founding fathers, though, economists have not emancipated themselves from politics. They claim to do science but they have never risen above the level of opinion, belief, wish-wash, storytelling, soap box propaganda, and sitcom gossip.
The orthodox majority still believes in these Walrasian hard core absurdities: "HC1 economic agents have preferences over outcomes; HC2 agents individually optimize subject to constraints; HC3 agent choice is manifest in interrelated markets; HC4 agents have full relevant knowledge; HC5 observable outcomes are coordinated, and must be discussed with reference to equilibrium states." (Weintraub)
To be clear: HC2, HC4, HC5 are NONENTITIES like angels, Spiderman, or the Easter Bunny.
The heterodox minority still believes in these ill-defined Keynesian relationships: "Income = value of output = consumption + investment. Saving = income - consumption. Therefore saving = investment."
Until this day, Walrasians, Keynesians, Marxians, Austrians hold to their provable false beliefs and claim to do science. This is absurdity on stilts but it is swallowed hook, line and sinker by every new generation of economics students. Compared to the representative economist the average political sucker is a genius.
#1 The Washington Post
Dec 29, 2016 | economistsview.typepad.com
Catherine Rampell:American Believe Crazy, Wrong Things : Many Americans believe a lot of dumb, crazy, destructive, provably wrong stuff.
JohnH, December 28, 2016 at 03:23 PMAmericans are also led to believe a lot of crazy, wrong things, such as Saddam had WMDs, or Iran had a nuclear weapons program, to cite only the most outrageous lies dutifully propagated by the mainstream media.yuan -> JohnH... , December 28, 2016 at 03:50 PM
Before Catherine Rampell criticizes ordinary Americans, she should have the Washington Post engage in a little serious introspection and self-criticism...The media should certainly shoulder some blame for parroting militarist propaganda but ordinary USAnians who continue to reward these scoundrels with their votes. And with Trump ordinary USAnians appear to have elected someone even more willing to shamelessly lie and loot than his predecessors.Chris G -> yuan... , -1
It is time for ordinary USAnians to engage in a lot of serious introspection and self-criticism. I doubt this will happen until it's too late. (Very thankful that I am not tied to this nation!)>It is time for ordinary USAnians to engage in a lot of serious introspection and self-criticism.
Don't hold your breath. Introspection and self-criticism aren't our strong suits. They run counter to that whole "American exceptionalism" thing.
> I doubt this will happen until it's too late.
I doubt that it will ever happen but, if it does, I have no doubt that it will happen until after its too late to salvage what currently passes for civilization in these parts.
"There's a big difference between the task of trying to sustain "civilisation" in its current form... and the task of holding open a space for the things which make life worth living. I'd suggest that it's this second task, in its many forms, which remains, after we've given up on false hopes." ( http://dark-mountain.net/blog/what-do-you-do-after-you-stop-pretending/)
Time to let go of false hopes.
Dec 28, 2016 | economistsview.typepad.comsanjait -> Peter K.... December 28, 2016 at 05:02 PM , 2016 at 05:02 PMAt this point, when I hear people use the words "neoliberal," "elites" and "the media" in unspecified or highly generalized terms to make broad characterizations ... I know I'm dealing with an unserious person.sanjait -> sanjait... , December 28, 2016 at 05:05 PMIt's a lot like when someone says "structural reform" without specification in an economic discussion: An almost perfect indicator of vacuity.likbez -> sanjait... , -1Let's define the terms.
Neoliberals are those who adhere to the doctrine of Neoliberalism (the "prohibited" word you should not ever see in the US MSM ;-)
In this sense the term is very similar to Marxists (with the replacement of the slogan of "proletarians of all nations unite" with the "financial oligarchy of all countries unite"). Or more correctly they are the "latter day Trotskyites".
Neoliberalism consists of several eclectic parts such as neoclassic economics, mixture of Nietzscheanism (often in the form of Ann Rand philosophy; with the replacement of concept of Ubermench with "creative class" concept)) with corporatism. Like with Marxism there are different flavors of neoliberalism and different factions like "soft neoliberalism" (Clinton third way) which is the modern Democratic Party doctrine, and hard neoliberalism (Republican party version), often hostile to each other.
But there are other flavors too. For example Trump introduced another flavor which I called "bastard neoliberalism". Which is the neoliberalism without neoliberal globalization and without "Permanent revolution" mantra -- efforts for enlargement of the US led global neoliberal empire. Somewhat similar to Eduard Bernstein "revisionism" in Marxism. Or Putinism - which is also a flavor of neoliberalism with added "strong state" part and "resource nationalism" bent, which upset so much the US neoliberal establishment, as it complicates looting of the country by transnational corporations.
Neoliberalism also can be viewed as a modern mutation of corporatism, favoring multinationals (under disguise of "free trade"), privatization of state assets, minimal government intervention in business (with financial oligarchy being like Soviet nomenklatura above the law), reduced public expenditures on social services, and decimation of New Deal, strong anti trade unionism stance and attempt to atomize work force (perma temps as preferred mode of employment giving employers "maximum flexibility") , neocolonialism and militarism in foreign relations (might makes right).
Like for any corporatist thinkers the real goals are often hidden under thick smoke screen of propaganda.
The word "elite" in the context of neoliberalism has the same meaning as the Russian word nomenklatura. https://en.wikipedia.org/wiki/Nomenklatura, -- the political establishment holding or controlling both public and private power centers such as media, finance, academia, culture, trade, industry, state and international institutions.
Dec 28, 2016 | economistsview.typepad.comEconomists believe crazy things: December 28, 2016 at 06:05 PM
[As if] protectionist Japan is now backward and poverty stricken; free trade Africa is soaring on the wings of giant trade deficits :Economists lead the way in silly beliefs that defy empirical reality and common sense. The most glaring example of this is the view that free trade is beneficial. All evidence points in the opposite direction, but no matter - our fake economists are happy to say/believe whatever so long as their foreign government paymasters and banks write the ten thousand dollar checks for "consulting" and "academic reports".
likbez -> Economists believe crazy things.. December 28, 2016 at 07:31 PMYou are probably wrong. Free trade is a delicate instrument, much like tennis racket. If you hold it too tightly you can't play well. If you hold it too loose you can't play well either.
Neoliberals promote "free trade" (note "free" not "fair") as the universal cure for all nations problems in all circumstances. This is a typical neoliberal Three-card Monte.
The real effect in many cases is opening market for transnationals who dictate nations the rules of the game and loot the country.
But isolationism has its own perils. So some middle ground should be fought against excessive demands of neoliberal institutions like IMF and World Bank. For example, any country that take loans from them (usually on pretty harsh conditions; with string attached), has a great danger that money will be looted via local fifth column. And will return in no time back into Western Banks leaving the country in the role of the debt slave.
The latter is the preferred role neoliberals want to see each and every third world country (and not only third world countries -- see Greece and Cyprus). Essentially in their "secret" book this is the role those counties should be driven into.
Recent looting of Ukraine is the textbook example of this process. The majority of population now will live on less then $2 a day for many, many years.
At the same time, balancing free trade and isolationism is tricky process also. Because at some point, the subversion starts and three letter agencies come into the play. You risk getting color revolution as a free present for your refusal to play the game.
Neoliberals usually do not take NO for the answer.
That's when the word "neoliberal" becomes yet another dirty word.
Dec 28, 2016 | economistsview.typepad.comDid William Casey (CIA Director) really say, "We'll know our disinformation program is complete when everything the American public believes is false."?
Catherine Rampell:American Believe Crazy, Wrong Things : Many Americans believe a lot of dumb, crazy, destructive, provably wrong stuff.
JohnH : , December 28, 2016 at 03:23 PMAmericans are also led to believe a lot of crazy, wrong things, such as Saddam had WMDs, or Iran had a nuclear weapons program, to cite only the most outrageous lies dutifully propagated by the mainstream media.yuan -> JohnH... , December 28, 2016 at 03:50 PM
Before Catherine Rampell criticizes ordinary Americans, she should have the Washington Post engage in a little serious introspection and self-criticism...The media should certainly shoulder some blame for parroting militarist propaganda but ordinary USAnians who continue to reward these scoundrels with their votes. And with Trump ordinary USAnians appear to have elected someone even more willing to shamelessly lie and loot than his predecessors.yuan -> yuan... , December 28, 2016 at 03:50 PM
It is time for ordinary USAnians to engage in a lot of serious introspection and self-criticism. I doubt this will happen until it's too late. (Very thankful that I am not tied to this nation!)"but it is ordinary"
Dec 27, 2016 | economistsview.typepad.comFred C. Dobbs : December 27, 2016 at 05:06 AM , 2016 at 05:06 AM(Does this have something to do
with Jon Stewart's retirement &
Stephen Colbert 'going legit'?)
Wielding Claims of 'Fake News,' Conservatives
Take Aim at Mainstream Media http://nyti.ms/2iuFxRx
NYT - JEREMY W. PETERS - December 25, 2016
WASHINGTON - The CIA, the F.B.I. and the White House may all agree that Russia was behind the hacking that interfered with the election. But that was of no import to the website Breitbart News, which dismissed reports on the intelligence assessment as "left-wing fake news."
Rush Limbaugh has diagnosed a more fundamental problem. "The fake news is the everyday news" in the mainstream media, he said on his radio show recently. "They just make it up."
Some supporters of President-elect Donald J. Trump have also taken up the call. As reporters were walking out of a Trump rally this month in Orlando, Fla., a man heckled them with shouts of "Fake news!"
Until now, that term had been widely understood to refer to fabricated news accounts that are meant to spread virally online. But conservative cable and radio personalities, top Republicans and even Mr. Trump himself, incredulous about suggestions that fake stories may have helped swing the election, have appropriated the term and turned it against any news they see as hostile to their agenda.
In defining "fake news" so broadly and seeking to dilute its meaning, they are capitalizing on the declining credibility of all purveyors of information, one product of the country's increasing political polarization. And conservatives, seeing an opening to undermine the mainstream media, a longtime foe, are more than happy to dig the hole deeper.
"Over the years, we've effectively brainwashed the core of our audience to distrust anything that they disagree with. And now it's gone too far," said John Ziegler, a conservative radio host, who has been critical of what he sees as excessive partisanship by pundits. "Because the gatekeepers have lost all credibility in the minds of consumers, I don't see how you reverse it."
Journalists who work to separate fact from fiction see a dangerous conflation of stories that turn out to be wrong because of a legitimate misunderstanding with those whose clear intention is to deceive. A report, shared more than a million times on social media, that the pope had endorsed Mr. Trump was undeniably false. But was it "fake news" to report on data models that showed Hillary Clinton with overwhelming odds of winning the presidency? Are opinion articles fake if they cherry-pick facts to draw disputable conclusions?
"Fake news was a term specifically about people who purposely fabricated stories for clicks and revenue," said David Mikkelson, the founder of Snopes, the myth-busting website. "Now it includes bad reporting, slanted journalism and outright propaganda. And I think we're doing a disservice to lump all those things together."
The right's labeling of "fake news" evokes one of the most successful efforts by conservatives to reorient how Americans think about news media objectivity: the move by Fox News to brand its conservative-slanted coverage as "fair and balanced." Traditionally, mainstream media outlets had thought of their own approach in those terms, viewing their coverage as strictly down the middle. Republicans often found that laughable.
As with Fox's ubiquitous promotion of its slogan, conservatives' appropriation of the "fake news" label is an effort to further erode the mainstream media's claim to be a reliable and accurate source. ...
Mar 29, 2015 | Angry Bear
Noam Scheiber has a hard hitting article on the front page of www.nytimes.com "2016 Candidates and Wealthy Are Aligned on Inequality"
The content should be familiar to AngryBear readers. A majority of Americans are alarmed by high and increasing inequality and support government action to reduce inequality. However, none of the important 2016 candidates has expressed any willingness to raise taxes on the rich. The Republicans want to cut them and Clinton (and a spokesperson) dodge the question.
Rich individuals (who are willing to be interviewed) also express concern about inequality but generally oppose using higher taxes on the rich to fight it. Scheiber is very willing to bluntly state his guess (and everyone's) that candidates are eager to please the rich, because they spend much of their time begging the rich for contributions.
No suprise to anyone who has been paying attention except for the fact that it is on the front page of www.nytimes.com and the article is printed in the business section not the opinion section. Do click the link - it is brief, to the point, solid, alarming and a must read.
I clicked one of the links and found weaker evidence than I expected for Scheiber's view (which of course I share
"By contrast, more than half of Americans and three-quarters of Democrats believe the "government should redistribute wealth by heavy taxes on the rich," according to a Gallup poll of about 1,000 adults in April 2013."
It is a small majority 52% favor and 47% oppose. This 52 % is noticeably smaller than the solid majorities who have been telling Gallup that high income individuals pay less than their fair share of taxes (click and search for Gallup on the page).
I guess this isn't really surprising - the word "heavy" is heavy maaaan and "redistribute" evokes the dreaded welfare (and conservatives have devoted gigantic effort to giving it pejorative connotations). The 52% majority is remarkable given the phrasing of the question. But it isn't enough to win elections, since it is 52% of adults which corresponds to well under 52% of actual voters.
My reading is that it is important for egalitarians to stress the tax cuts for the non rich and that higher taxes on the rich are, unfortunately, necessary if we are to have lower taxes on the non rich without huge budget deficits. This is exactly Obama's approach.
March 29, 2015 10:40 pm
Get rid of tax breaks that only the wealthy can take advantage of and perhaps everyone will pay their fair share. The same goes for corporations.
March 30, 2015 11:42 am
Of course another way to reduce inequality is to raise wages. Buried way down around paragraph 9 I found this gem: "Forty percent of the wealthy, versus 78 percent of the public, said the government should make the minimum wage "high enough so that no family with a full-time worker falls below the official poverty line."
I'm fine with raising people's taxes by increasing their wages. A story I heard on NPR recently indicated that a single person needs to make about $17-19 an hour to cover most basic necessities nowadays (the story went on to say that most people in that situation are working 2 or more jobs to get enough income, a "solution" that creates more problems with health/stress etc.). A full time worker supporting kids needs more than $20.
You double the minimum wage and strengthen people's rights to organize union representation. Tax revenues go up (including SS contributions btw) and we add significant growth to the economy with the increased purchasing power of workers. People can go back to working 40-50 hours a week and cut back on moonlighting which creates new job opportunities for the younger folks decimated by this so called recovery.
Win Win Win Win. And the poor overburdened millionaires don't have to have their poor tax fee fees hurt.
Mark Jamison, March 30, 2015 8:09 pm
How about if we get rid of the "re" and call it what it is "distribution". The current foundational rules embedded in tax law, intellectual property law, corporate construction law, and other elements of our legal and regulatory system result in distributions that favor those with capital or in a position to seek rents.
This isn't a situation that calls for a Robin Hood who takes from the rich and gives to the poor. It is more a question of how elites have rigged the system to work primarily for them. Democrats cede the rhetoric to the Right when they allow the discussion to be about redistribution. Even talk of inequality without reference to the basic legal constructs that are rigged to create slanted outcomes tend to accepted premises that are in and of themselves false.
The issue shouldn't be rejiggering things after the the initial distribution but creating a system with basic rules that level the opportunity playing field.
coberly, March 30, 2015 11:03 pm
Thank You Mark Jamison!
An elegant, informed writer who says it better than I can.
But here is how I would say it:
Addressing "inequality" by "tax the rich" is the wrong answer and a political loser.
Address inequality by re-criminalizing the criminal practices of the criminal rich. Address inequality by creating well paying jobs with government jobs if necessary (and there is necessary work to be done by the government), with government protection for unions, with government policies that make it less profitable to off shore
etc. the direction to take is to make the economy more fair . actually more "free" though you'll never get the free enterprise fundamentalists to admit that's what it is. You WILL get the honest rich on your side. They don't like being robbed any more than you do.
But you will not, in America, get even poor people to vote to "take from the rich to give to the poor." It has something to do with the "story" Americans have been telling themselves since 1776. A story heard round the world.
That said, there is nothing wrong with raising taxes on the rich to pay for the government THEY need as well as you. But don't raise taxes to give the money to the poor. They won't do it, and even the poor don't want it except as a last resort, which we hope we are not at yet.
urban legend, March 31, 2015 2:07 am
Coberly, you are dead-on. Right now, taxation is the least issue. Listen to Jared Bernstein and Dean Baker: the problem is incomes and demand, and the first and best answer for creating demand for workers and higher wages to compete for those workers is full employment. Minimum wage will help at the margins to push incomes up, and it's the easiest initial legislative sell, but the public will support policies - mainly big-big infrastructure modernization in a country that has neglected its infrastructure for a generation - that signal a firm commitment to full employment.
It's laying right there for the Democrats to pick it up. Will they? Having policies that are traditional Democratic policies will not do the job. For believability - for convincing voters they actually have a handle on what has been wrong and how to fix it - they need to have a story for why we have seem unable to generate enough jobs for over a decade. The neglect of infrastructure - the unfilled millions of jobs that should have gone to keeping it up to date and up to major-country standards - should be a big part of that story. Trade and manufacturing, to be sure, is the other big element that will connect with voters. Many Democrats (including you know who) are severely compromised on trade, but they need to find a way to come own on the right side with the voters.
coberly, March 31, 2015 10:52 am
i wish you'd give some thought to the other comments on this post.
if you are proposing raising taxes on the rich SO THAT you can cut taxes on the non rich you are simply proposing theft. if you were proposing raising taxes on the rich to provide reasonable welfare to those who need it you would be asking the rich to contribute to the strength of their own country and ultimately their own wealth.
i hope you can see the difference.
it is especially irritating to me because many of the "non rich" who want their taxes cut make more than twice as much as i do. what we are looking at here is simple old fashioned greed just as stupid and ugly among the "non rich" as it is among the rich.
"the poor" in this country do not pay a significant amount of taxes (Social Security and Medicare are not "taxes," merely an efficient way for us to pay for our own direct needs . as long as you call them taxes you play into the hands of the Petersons who want to "cut taxes" and leave the poor elderly to die on the streets, and the poor non-elderly to spend their lives in anxiety and fear-driven greed trying to provide against desperate poverty in old age absent any reliable security for their savings.)
Kai-HK, April 4, 2015 12:23 am
Thanks for your well-reasoned response.
You state, 'i personally am not much interested in the "poor capitalist will flee the country if you tax him too much." in fact i'd say good riddance, and by the way watch out for that tarriff when you try to sell your stuff here.'
(a) What happens after thy leave? Sure you can get one-time 'exit tax' but you lose all the intellectual capital (think of Bill Gates, Warren Buffet, or Steve Jobs leaving and taking their intellectual property and human capital with them). These guys are great jobs creators it will not only be the 'bad capitalists' that leave but also many of the 'job creating' good ones.
(b) I am less worried about existing job creating capitalists in America; what about the future ones? The ones that either flee overseas and make their wealth there or are already overseas and then have a plethora of places they can invest but why bother investing in the US if all they are going to do is call me a predator and then seize my assets and or penalise me for investing there? Right? It is the future investment that gets impacted not current wealth per se.
You also make a great point, 'the poor are in the worst position with respect to shifting their tax burden on to others. the rich do it as a matter of course. it would be simpler just to tax the rich there are fewer of them, and they know what is at stake, and they can afford accountants. the rest of us would pay our "taxes" in the form of higher prices for what we buy.'
Investment capital will go where it is best treated and to attract investment capital a market must provide a competitive return (profit margin or return on investment). Those companies and investment that stay will do so because they are able to maintain that margin .and they will do so by either reducing wages or increasing prices. Where they can do neither, their will exit the market.
That is why, according to research, a bulk of the corporate taxation falls on workers and consumers as a pass-on effect. The optimum corporate tax is 0. This will be the case as taxation increases on the owners of businesses and capital .workers, the middle class, and the poor pay it. The margins stay competitive for the owners of capital since capital is highly mobile and fungible.Workers and the poor less so.
But thanks again for the tone and content of your response. I often get attacked personally for my views instead of people focusing on the issue. I appreciate the respite.
coberly, April 4, 2015 12:34 pm
yes, but you missed the point.
i am sick of the whining about taxes. it takes so much money to run the country (including the kind of pernicious poverty that will turn the US into sub-saharan africa. and then who will buy their products.
i can't do much about the poor whining about taxes. they are just people with limited understanding, except for their own pressing needs. the rich know what the taxes are needed for, they are just stupid about paying them. of course they would pass the taxes through to their customers. the customers would still buy what they need/want at the new price. leaving everyone pretty much where they are today financially. but the rich would be forced to be grownup about "paying" the taxes, and maybe the politics of "don't tax me tax the other guy" would go away.
as for the sainted bill gates. there are plenty of other people in this country as smart as he is and would be happy to sell us computer operating systems and pay the taxes on their billion dollars a year profits.
nothing breaks my heart more than a whining millionaire.
April 4, 2015 11:32 pm
Sure I got YOUR point, it just didn't address MY points as put forth in MY original post. And it still doesn't.
More importantly, you have failed to defend YOUR point against even a rudimentary challenge.
coberly, April 5, 2015 12:45 pm
rudimentary is right.
i have read your "points" about sixteen hundred times in the last year alone. made by the ayn rand faithful. it is wearisome.
and i have learned there is no point in trying to talk to true believers.
William Ryan, May 13, 2015 4:43 pm
Thanks again Coberly for your and K's very thoughtful insight. You guys really made me think hard today and I do see your points about perverted capitalism being a big problem in US. I still do like the progressive tax structure and balanced trade agenda better.
I realize as you say that we cannot compare US to Hong Kong just on size and scale alone. Without all the obfuscation going Lean by building cultures that makes people want to take ownership and sharing learning and growing together is a big part of the solution Ford once said "you cannot learn in school what the world is going to do next".
Also never argue with an idiot. They will bring you down to their level then beat you with experience. The only cure for organized greed is organized labor. It's because no matter what they do nothing get done about it. With all this manure around there must be a pony somewhere! "
- A typical voice of American politics is the avoidance of saying anything real on real issues". FDR.
- Rich people pay rich people to tell middle class people to blame poor people
- Earth doesn't matter, people don't matter, even economy doesn't matter . The only thing that matters is R.W. nut bar total ownership of everything.
- I'm sorry I put profits ahead of people, greed above need and the rule of gold above God's golden rules.
- I try to stay away from negative people who have a problem for every solution
- We need capitalism that is based on justice and greater corporate responsibility. I do not speak nor do I comprehend assholian.
- "If you don't change direction , you may end up where you are headed". Lao-Tzu.
- "The true strength of our nation comes not from our arm or wealth but from our ideas". Obama..
- "If the soul is left to darkness, sins will be committed. The guilty one is not the one who commits the sins, but the one who caused the darkness". Victor Hugo.
coberly , May 16, 2015 9:57 pm
as a matter of fact i disagree with the current "equality" fad at least insofar as it implies taking from the rich and giving to the poor directly.
i don't believe people are "equal" in terms of their economic potential. i do beleive they are equal in terms of being due the respect of human beings.
i also believe your simple view of "equality" is a closet way of guarantee that the rich can prey upon the poor without interruption.
humans made their first big step in evolution when they learned to cooperate with each other against the big predators.
Jerry Critter, May 17, 2015 12:10 am
it is mildly progressive up to about $75,000 per year where the rate hits 30%. But from there up to $1.542 million the rate only increases to 33.3%.
I call that very flat!
Jerry Critter, May 17, 2015 11:20 am
"i assume there are people in this country who are truly poor. as far as i know they don't pay taxes."
Read my reference and you will see that the "poor" indeed pay taxes, just not much income tax because they don't have much income. You are fixated on income when we should be considering all forms of taxation.
Jerry Critter, May 17, 2015 9:25 pm
Oh Kai, cut the crap. Paying taxes Is nothing like slavery. My oh my, how did we ever survive with a top tax rate of around 90%, nearly 3 times the current rate? Some people would even say that the economy then was pretty great and the middle class was doing terrific. So stop the deflection and redirection. I think you just like to see how many words you can write. Sorry, but history is not on your side.
Dec 27, 2016 | www.unz.comMike Whitney... ... ..
Bottom line: Trump's Santa Rally could turn into a stock market bloodbath unless he's able to deliver on his promises, which doesn't look very likely. Check this out from Bloomberg:
"President-elect Donald Trump's race to enact the biggest tax cuts since the 1980s went under a caution flag Monday as Senate Majority Leader Mitch McConnell warned he considers current levels of U.S. debt "dangerous" and said he wants any tax overhaul to avoid adding to the deficit.
"I think this level of national debt is dangerous and unacceptable," McConnell said, adding he hopes Congress doesn't lose sight of that when it acts next year. "My preference on tax reform is that it be revenue neutral," he said
The Committee for a Responsible Federal Budget, a nonpartisan think tank, has projected that Trump's plans would increase the debt by $5.3 trillion over a decade, with deficits already over $600 billion a year and rising on autopilot
What I hope we will clearly avoid, and I'm confident we will, is a trillion-dollar stimulus," he said. "Take you back to 2009. We borrowed $1 trillion and nobody could find that it did much of anything. So we need to do this carefully and correctly and the issue of how to pay for it needs to be dealt with responsibly." ( McConnell, Warning of 'Dangerous' Debt, Wants Tax Cut Offsets , Bloomberg)
It doesn't sound like McConnell is a big fan of Trump's economic plan, does it? So why has the Dow risen to within 26 points of the 20,000-mark if that's the case?? Do investors think that Trump can simply issue an executive order and force Congress to do what he wants?
Good luck with that. The deficit-crazed Republicans are just as committed to austerity as ever, mainly because slashing government spending coupled with low interest rates is a tried-and-true method of transferring obscene amounts of money to the 1 percenters. Why would they tinker with a mechanism that works perfectly already?
They won't, at least not to the extent that it'll have any meaningful impact on the living standards of millions of working people across America. Congress is going to prevent that at all cost. And so will the Fed. Just listen to what Yellen had to say to a journalist from the Washington Post last week following the FOMC meeting. She was asked point-blank whether she thought the economy needed more fiscal stimulus or not. Her answer:
"Well I called for fiscal stimulus when the unemployment rate was substantially higher than it is now. So with a 4.6 percent unemployment, and a solid labor market, there may be some additional slack in labor markets, but I would judge that the degree of slack has diminished, So I would say at this point that fiscal policy is not obviously needed to help us get back to full employment But nevertheless, let me be careful that I am not trying to provide advice to the new administration or to Congress as to what is the appropriate stance of policy."
Nice, eh? Yellen threatens Trump with three more rate hikes in 2017, torpedoes his $1 trillion infrastructure plan with a wave of the hand, and then has the audacity to deny that she's dictating policy.
Of course she's dictating policy. What else would you call it?
Yellen is saying as clearly as possible, that if Trump launches his fiscal spending plan, the Fed's going to slap him down by raising rates. If that's not a threat, then what is??
Dec 27, 2016 | economistsview.typepad.comanne :http://gabriel-zucman.eu/files/PSZ2016.pdf
Distributional National Accounts: Methods and Estimates for the United States
By Thomas Piketty, Emmanuel Saez, and Gabriel Zucman
This paper combines tax, survey, and national accounts data to estimate the distribution of national income in the United States since 1913. Our distributional national accounts capture 100% of national income, allowing us to compute growth rates for each quantile of the income distribution consistent with macroeconomic growth. We estimate the distribution of both pre-tax and post-tax income, making it possible to provide a comprehensive view of how government redistribution affects inequality.
- Average pre-tax national income per adult has increased 60% since 1980, but we find that it has stagnated for the bottom 50% of the distribution at about $16,000 a year.
- The pre-tax income of the middle class-adults between the median and the 90th percentile-has grown 40% since 1980, faster than what tax and survey data suggest, due in particular to the rise of tax-exempt fringe benefits.
- Income has boomed at the top: in 1980, top 1% adults earned on average 27 times more than bottom 50% adults, while they earn 81 times more today.
- The upsurge of top incomes was first a labor income phenomenon but has mostly been a capital income phenomenon since 2000.
The government has offset only a small fraction of the increase in inequality. The reduction of the gender gap in earnings has mitigated the increase in inequality among adults. The share of women, however, falls steeply as one moves up the labor income distribution, and is only 11% in the top 0.1% today.Reply Tuesday, December 27, 2016 at 01:09 PM anne -> anne... , December 27, 2016 at 01:13 PMhttp://gabriel-zucman.eu/files/PSZ2016.pdf
Distributional National Accounts: Methods and Estimates for the United States
By Thomas Piketty, Emmanuel Saez, and Gabriel Zucman
Introduction Income inequality has increased in many developed countries over the last several decades. This trend has attracted considerable interest among academics, policy-makers, and the general public. In recent years, following up on Kuznets' (1953) pioneering attempt, a number of authors have used administrative tax records to construct long-run series of top income shares (Alvaredo et al., 2011-2016). Yet despite this endeavor, we still face three important limitations when measuring income inequality. First and most important, there is a large gap between national accounts-which focus on macro totals and growth-and inequality studies-which focus on distributions using survey and tax data, usually without trying to be fully consistent with macro totals. This gap makes it hard to address questions such as: What fraction of economic growth accrues to the bottom 50%, the middle 40%, and the top 10% of the distribution? How much of the rise in income inequality owes to changes in the share of labor and capital in national income, and how much to changes in the dispersion of labor earnings, capital ownership, and returns to capital? Second, about a third of U.S. national income is redistributed through taxes, transfers, and public good spending. Yet we do not have a good measure of how the distribution of pre-tax income differs from the distribution of post-tax income, making it hard to assess how government redistribution affects inequality. Third, existing income inequality statistics use the tax unit or the household as unit of observation, adding up the income of men and women. As a result, we do not have a clear view of how long-run trends in income concentration are shaped by the major changes in women labor force participation-and gender inequality generally-that have occurred over the last century.
This paper attempts to compute inequality statistics for the United States that overcome the limits of existing series by creating distributional national accounts. We combine tax, survey, and national accounts data to build new series on the distribution of national income since 1913. In contrast to previous attempts that capture less than 60% of US national income- such as Census bureau estimates (US Census Bureau 2016) and top income shares (Piketty and Saez, 2003)-our estimates capture 100% of the national income recorded in the national accounts. This enables us to provide decompositions of growth by income groups consistent with macroeconomic growth. We compute the distribution of both pre-tax and post-tax income. Post-tax series deduct all taxes and add back all transfers and public spending, so that both pre-tax and post-tax incomes add up to national income. This allows us to provide the first comprehensive view of how government redistribution affects inequality. Our benchmark series uses the adult individual as the unit of observation and splits income equally among spouses. We also report series in which each spouse is assigned her or his own labor income, enabling us to study how long-run changes in gender inequality shape the distribution of income.
Distributional national accounts provide information on the dynamic of income across the entire spectrum-from the bottom decile to the top 0.001%-that, we believe, is more accurate than existing inequality data. Our estimates capture employee fringe benefits, a growing source of income for the middle-class that is overlooked by both Census bureau estimates and tax data. They capture all capital income, which is large-about 30% of total national income- and concentrated, yet is very imperfectly covered by surveys-due to small sample and top coding issues-and by tax data-as a large fraction of capital income goes to pension funds and is retained in corporations. They make it possible to produce long-run inequality statistics that control for socio-demographic changes-such as the rise in the fraction of retired individuals and the decline in household size-contrary to the currently available tax-based series.
Methodologically, our contribution is to construct micro-files of pre-tax and post-tax income consistent with macro aggregates. These micro-files contain all the variables of the national accounts and synthetic individual observations that we obtain by statistically matching tax and survey data and making explicit assumptions about the distribution of income categories for which there is no directly available source of information. By construction, the totals in these micro-files add up to the national accounts totals, while the distributions are consistent with those seen in tax and survey data. These files can be used to compute a wide array of distributional statistics-labor and capital income earned, taxes paid, transfers received, wealth owned, etc.-by age groups, gender, and marital status. Our objective, in the years ahead, is to construct similar micro-files in as many countries as possible in order to better compare inequality across countries. Just like we use GDP or national income to compare the macroeconomic performances of countries today, so could distributional national accounts be used to compare inequality across countries tomorrow.
We stress at the outset that there are numerous data issues involved in distributing national income, discussed in the text and the online appendix. First, we take the national accounts as a given starting point, although we are well aware that the national accounts themselves are imperfect (e.g., Zucman 2013). They are, however, the most reasonable starting point, because they aggregate all the available information from surveys, tax data, corporate income statements, and balance sheets, etc., in an standardized, internationally-agreed-upon and regularly improved upon accounting framework. Second, imputing all national income, taxes, transfers, and public goods spending requires making assumptions on a number of complex issues, such as the economic incidence of taxes and who benefits from government spending. Our goal is not to provide definitive answers to these questions, but rather to be comprehensive, consistent, and explicit about what assumptions we are making and why. We view our paper as attempting to construct prototype distributional national accounts, a prototype that could be improved upon as more data become available, new knowledge emerges on who pays taxes and benefits from government spending, and refined estimation techniques are developed-just as today's national accounts are regularly improved....
Dec 27, 2016 | economistsview.typepad.com
December 27, 2016 at 04:40 AM
Low oil prices and an increasingly costly war in Yemen have torn a yawning hole in the Saudi budget and created a crisis that has led to cuts in public spending, reductions in take-home pay and benefits for government workers and a host of new fees and fines. Huge subsidies for fuel, water and electricity that encourage overconsumption are being curtailed. ...
Dec 27, 2016 | economistsview.typepad.comJohn San Vant... Tuesday, December 27, 2016 at 08:07 AM , December 27, 2016 at 08:07 AMJohn,
I wonder what facts you have to label Trump's team "globalist shills".
Robert W. Merry in his National Interest article disagrees with you
=== start of the quote ===
Globalists captured much of American society long ago by capturing the bulk of the nation's elite institutions -- the media, academia, big corporations, big finance, Hollywood, think tanks, NGOs, charitable foundations. So powerful are these institutions -- in themselves and, even more so, collectively -- that the elites running them thought that their political victories were complete and final. That's why we have witnessed in recent years a quantum expansion of social and political arrogance on the part of these high-flyers.
Then along comes Donald Trump and upends the whole thing. Just about every major issue that this super-rich political neophyte has thrown at the elites turns out to be anti-globalist and pro-nationalist. And that is the single most significant factor in his unprecedented and totally unanticipated rise. Consider some examples:
Immigration: Nationalists believe that any true nation must have clearly delineated and protected borders, otherwise it isn't really a nation. They also believe that their nation's cultural heritage is sacred and needs to be protected, whereas mass immigration from far-flung lands could undermine the national commitment to that heritage.
Globalists don't care about borders. They believe the nation-state is obsolete, a relic of the 1648 Peace of Westphalia, which codified the recognition of co-existing nation states.
Globalists reject Westphalia in favor of an integrated world with information, money, goods and people traversing the globe at accelerating speeds without much regard to traditional concepts of nationhood or borders.
=== end of the quote ===
I wonder how "globalist shills" mantra correlates with the following Trump's statements:
=== start of quote ===
"Globalization has made the financial elite who donate to politicians very, very wealthy ... but it has left millions of our workers with nothing but poverty and heartache," Trump told supporters during a prepared speech targeting free trade in a nearly-shuttered former steel town in Pennsylvania.
In a speech devoted to what he called "How To Make America Wealthy Again," Trump offered a series of familiar plans designed to deal with what he called [Obama] "failed trade policies" - including rejection of the proposed Trans-Pacific Partnership (TPP) with Pacific Rim nations and re-negotiation of the North American Free Trade Agreement (NAFTA) with Canada and Mexico, withdrawing from it if necessary.
The presumptive Republican presidential nominee also said he would pursue bilateral trade agreements rather than multi-national deals like TPP and NAFTA.
In addition to appointing better trade negotiators and stepping up punishment of countries that violate trade rules, Trump's plans would also target one specific economic competitor: China. He vowed to label China a currency manipulator, bring it before the World Trade Organization and consider slapping tariffs on Chinese imports coming into the U.S.
Dec 27, 2016 | economistsview.typepad.comFred C. Dobbs : December 27, 2016 at 03:37 AM
Suicide rates rise after jobs move overseas, study finds
via @BostonGlobe - Deirdre Fernandes - December 27, 2016
FALL RIVER - In this struggling industrial city, changes in trade policy are being measured not only in jobs lost, but also in lives lost - to suicide.
The jobs went first, the result of trade deals that sent them overseas. Once-humming factories that dressed office workers and soldiers, and made goods to furnish their homes, stand abandoned, overtaken by weeds and graffiti.
And now there is research on how the US job exodus parallels an increase in suicides. A one percentage point increase in unemployment correlated with an 11 percent increase in suicides, according to Peter Schott, a Yale University economist who coauthored the report with Justin Pierce, a researcher at the Federal Reserve Board.
The research doesn't prove a definitive link between lost jobs and suicide; it simply notes that as jobs left, suicides rose. Workers who lost their jobs may have been pushed over the edge and turned to suicide or drug addiction, lacking financial resources or community connections to get help, the authors suggest.
The research contributes to a growing body of work that shows the dark side of global trade: the dislocation, anger, and despair in some parts of the country that came with the United States' easing of trade with China in 2000. The impact of job losses was greatest in places such as Fall River and other cities in Bristol County, along with rural manufacturing counties in New Hampshire and Maine, vast stretches of the South, and portions of the Rust Belt.
"There are winners and losers in trade," Schott said. "If you go to these communities, you can see the disruptions."
The unemployment rate in Fall River remains persistently high and at 5.5 percent in September was a good two points above the Massachusetts average. Nearly one in three households gets some sort of public assistance.
Opposition to global trade policies became a rallying cry in Donald Trump's campaign, propelling him into the White House with strategic wins in the industrial Midwest and the South. Trump has threatened to impose tariffs on Chinese goods and has bashed recent US trade pacts. ...
Fred C. Dobbs -> Fred C. Dobbs... , December 27, 2016 at 03:41 AM... Previous trade deals, including the 1994 North American Free Trade Agreement with Canada and Mexico, chipped away at US manufacturing towns. But economists say the decision to normalize relations with China was far more disruptive. Some economists have estimated the United States may have lost at least 1 million manufacturing jobs from 2000 to 2007 due to freer trade with China.Fred C. Dobbs -> Fred C. Dobbs... , December 27, 2016 at 03:55 AM
In Bristol County, which includes Fall River, New Bedford, and Taunton, manufacturing employed nearly a quarter of the workforce in 2000; now it provides jobs for only one in 10 workers.
Most of the manufacturing jobs lost since 2000 are unlikely to return, economists said. Automation has made manufacturing much more specialized, requiring more education and fewer workers, leaving parts of the country struggling to figure out how to reinvent their economies.
"We will probably never have as many manufacturing jobs as we had in 1960," Dunn said. "The question is how do we train workers and provide them opportunities to feel productive. What's clear from the election is an increasing number of people don't have those opportunities or don't feel that those opportunities will be available."
Officials in Fall River and Bristol County said they are trying to provide appropriate training, including computer programming, a prerequisite for many manufacturing jobs.
They also point out there have been recent victories.
- Amazon.com opened a distribution warehouse in Fall River and has been hiring in recent months to fill 500 jobs.
- Companies are eyeing Taunton for its cheaper land, access to highways, and state tax breaks.
- Norwood-based Martignetti Cos., among the state's largest wine and spirits distributors, last year agreed to move its headquarters to a Taunton industrial park.
Mayor Tom Hoye said Taunton has also been more active in recent years, holding community meetings and expanding social services for residents facing distress and drug addiction.
Despite the hits the city and its residents have taken, there is reason to be optimistic about the future, he said.
Jobs are returning, and the county's suicide rate dropped from 13 per 100,000 people in 2014 to 12 per 100,000 in 2015.
"We're reinventing ourselves," Hoye said on a recent morning as he sat in an old elementary school classroom that has served as the temporary mayor's office for several years.
"It's tough to lift yourself out of the hole sometimes. But we're much better off than we were 10 years ago."
'The research doesn't prove a definitiveFred C. Dobbs -> Fred C. Dobbs... , December 27, 2016 at 04:00 AM
link between lost jobs and suicide; it
simply notes that as jobs left,
Pierce, Justin R., and Peter K. Schott (2016). "Trade Liberalization and Mortality:
Evidence from U.S. Counties," Finance and Economics Discussion Series
2016-094. Washington: Board of Governors of the Federal Reserve System
http://faculty.som.yale.edu/peterschott/files/research/papers/pierce_schott_pntr_20150301.pdf(Note: The 2nd link is to aFred C. Dobbs -> Fred C. Dobbs... , December 27, 2016 at 04:27 AM
different paper, same authors.)
'The Surprisingly Swift Decline
of US Manufacturing Employment'Understanding vulnerability to self-Chris G -> Fred C. Dobbs... , -1
harm in times of economic hardship
and austerity: a qualitative study
M C Barnes, et al.
'This is the first UK study of self-harm
among people experiencing economic or
Characteristics of people dying by suicide after job loss, financial difficulties and other economic stressors during a period of recession (20102011): A review of coroners׳ records
Caroline Coope, et al
Journal of Affective Disorders
Volume 183, 1 - September 2015
Suicide rates rise after jobs move overseas, study finds
That's consistent with the GOP's notion of how to most effectively cover health problems: shoveled dirt.
Dec 27, 2016 | www.nakedcapitalism.comJohn k, December 26, 2016 at 2:33 pmSynoia , December 26, 2016 at 2:40 pm
Dems are the party of the rich and poor.
Really? When did they do something that benefitted the poor?
I would say both parties are for the rich and both do their best to distract their respective base with talk of abortion or race, while neither would like these red meat distractions disappear by being in any solved.
Why do they like these particular distractions? Because the rich don't care about either.
Trump broke the mold by talking about jobs in a meaningful way immigration and exporting factories both boost unemployment, suppressing wages while boosting profits; these topics have been forbidden since Ross Perot spoke of millions of jobs going south on account of Nafta, exactly what happened.
8mm official unemployment. 16mm reduced participation since 2005 in 25-54 age group.
24mm total, not counting part timers that want full time and 10mm fewer voted for dems in 2016 than 2008.
Exactly the same number that voted for Romney voted for trump, so Hillary lost obamas third term not because of a wave of trump racists but because there was somehow dissatisfaction among former dem voters regarding the great jobs program, low cost healthcare, and prosecution of bankers and other elites that drove the economy off the cliff. Granted, nominating the second most unpopular person in America might not guarantee success
Anyway, Trump should say, Thanks, Obama!John k , December 26, 2016 at 3:23 pm
8mm official unemployment. 16mm reduced participation since 2005 in 25-54 age group.
24mm total, not counting part timers that want full time
Obama's legacy. Read it and weep.WheresOurTeddy , December 26, 2016 at 3:29 pm
I mis spoke.
Nominating her had risks, but it assured Bernie would not be president, and Bernie was a far greater risk to bankers and the other dem paymasters than trump. Remember, for them it was existential, bernie would have jailed bankers. Trump is one of the oligarchs.
With her nom bankers let out a sigh of relief and could thankfully murmur, 'mission accomplished!'Vatch , December 26, 2016 at 7:12 pm
Bernie would not be president only if they Bobby Kennedy'd him.
It didn't come to that. They just fixed the primary.Yves Smith , December 26, 2016 at 10:22 pm
If Sanders had won the Democratic nomination, and he had been "Bobby Kennedy'd", people besides the conspiracy enthusiasts would have started to notice a pattern. Instead, there are millions of people who actually believe that Sanders lost the primaries to Clinton fair and square. Some of us know better. . . .
As for patterns, Trump's nominations for cabinet level offices are showing a pattern: billionaires, hecto-millionaires, overt vassals of the ultra-rich, and at least one (alleged) criminal: Ryan Zinke.marym , December 26, 2016 at 10:47 pm
The one unambiguously positive feature of Obamacare was Medicaid expansion, which does help the poor.ambrit , December 27, 2016 at 4:42 am
It does help people, but increased privatization and estate recovery make it not unambiguous.Cry Shop , December 27, 2016 at 5:36 am
True. Because of estate recovery, I am doing without medical "insurance" of any kind. As I tell Phyllis, if I get anything serious, just put me in my ragged old canvas chair in the back yard and keep the beer coming until I stop complaining.
This entire Medicade story is curious. I had thought that any self respecting oligarchy would want reasonably powerful clients to buttress the oligarch's power and influence. Instead, the Medicade Oligarchy buys into a "power base" of the poor and disenfranchised. The funds for this complex relationship are supplied, as best as I can discern, by the central government. What will the Medicade Oligarchs do when the "X" Oligarchs cut off or even just restrict the flow of funds from the central government?ambrit , December 27, 2016 at 5:46 am
Not just estate recovery. Loading Medicaid with more claimants, particularly poor, ethnic minority claimants, was a great way to stress it's gonig to need a neo-liberal cure, if the neo-cons don't use the opportunity Obama gave them to out right kill it. Medicaid isn't Medicare, and the retired folks know it. They, the retires, would kill it in a second if they could get an extra $100 per annum in free drugs.marym , December 27, 2016 at 8:44 am
I'm not too sure about the "Retired" "Poor" divide anymore. The two groups are converging and merging. Any animus experienced here would be the result of restriction of total benefits available. In other words, an artificially engineered conflict.
Once the "old folks" realize that they, as a class, are the poor, all bets will be off.marym , December 27, 2016 at 8:50 am
Once the "old folks" actually are poor enough to qualify for Medicaid (dual eligible) they are at risk for being tossed off Medicare into Medicaid managed care .Tully , December 27, 2016 at 11:41 am
Nor is Medicare Medicare, in the sense of being a fully public program. Medicare Advantage, Medicare supplemental insurance, and prescription drug insurance are all privatized.steelhead , December 26, 2016 at 2:59 pm
the funds supplied by the central government. No.
they are supplied by the taxpayers.
That is the system taxpayers subsidize private sector profits.Nittacci , December 26, 2016 at 3:00 pm
43 years. The decline started in 1973, the year I graduated from high school.grayslady , December 26, 2016 at 5:48 pm
"I'm guessing that upwards of 90% of United States voters work for wages"
How is that possible with a 62% labor participation rate? Do you believe unemployed, retired, students and stay-at-home parents don't vote?ambrit , December 27, 2016 at 4:46 am
Yes, I had a problem with that phrase, as well; especially as older people (read "retired") are known to have the highest percentage of actual voters. Assuming that the 90% is an overstatement, I don't believe it negates the point that all ages and all races can find common ground on certain issuesMedicare for All being one of those issues. Seniors would definitely get behind an improved Medicare, just as students, unemployed, working poor, and others would support such a sensible universal health care program.Baldacci , December 26, 2016 at 9:31 pm
" sensible universal health care program."
Sensible for whom? For the presently entrenched oligarchs, the system in use now is perfectly sensible.funemployed , December 27, 2016 at 9:34 am
Only 30-35% of the total US population votes in any one election. 90% would be possible.
They old though retired folks love them some voting. Work or have worked for wages, or had vital domestic labor supported by a wage earning family member would surely get us over 90 IMO. (sorry for quibbling Lambert. I think we all get the point. Thanks for the lovely essay)
Dec 27, 2016 | economistsview.typepad.comAngloSaxon : December 26, 2016 at 10:24 PM , 2016 at 10:24 PMIn my opinion, probably not. The government's 20th century "growth as a factory" underestimates service sector growth and our continued share shrink in 20th century industrial production means our "potential" growth is by this factory methiod, in decline. If we grow 3% it is a gaudy number by the government's own statistical backwardness.likbez -> AngloSaxon... , -1
To regenerate American factory growth is not possible right now under a market system. I mean, it simply isn't. If we tried, we would crater industrial growth as well with consumption cuts.Growth of the service sector is also under attack due to increasing "robotization", replacing salaried workers with "perma-temps" and underpaid contractors (Uber) as well as offshoring of help desk and such.
What's left? Military Keynesianism ?
Dec 27, 2016 | economistsview.typepad.comFred C. Dobbs :
In Russia, It's Not the Economy,
NYT - SERGEI GURIEV - Dec 25
LONDON - The Russian economy is in trouble - "in tatters," President Obama has said - so why aren't Russians more upset with their leaders? The country underwent a major recession recently. The ruble lost half of its value. And yet, according to a leading independent pollster in Russia, President Vladimir V. Putin's approval ratings have consistently exceeded 80 percent during the past couple of years.
One reason is that while the Russian economy is struggling, it is not falling apart, and many Russians remember times when it was in a much worse state. Another, perhaps more important, explanation is that Mr. Putin has convinced them that it's not the economy, stupid, anymore.
Thanks largely to the government's extensive control over information, Mr. Putin has rewritten the social contract in Russia. Long based on economic performance, it is now about geopolitical status. If economic pain is the price Russians have to pay so that Russia can stand up to the West, so be it.
It wasn't like this in the 1990s and 2000s. Back then the approval ratings of Russian leaders were closely correlated with economic performance, as the political scientist Daniel Treisman has demonstrated. When the economy began to recover from the 1998 financial crisis, Mr. Putin's popularity increased. It dipped when growth stalled. It climbed again in 2005, after the global price of oil - Russia' main export commodity - rose, foreign investment flowed in and domestic consumption boomed. And it fell substantially after growth rates slowed in 2012-13.
Russia's intervention in Crimea in early 2014 changed everything. Within two months, Mr. Putin's popularity jumped back to more than 80 percent, where it has stayed until now, despite the recession.
One might argue that these figures are misleading: Given the pressures faced by the Kremlin's political opponents, aren't respondents in polls too afraid to answer questions honestly? Hardly, according to a recent study co-written by the political scientist Tim Frye, based on an innovative method known as "list experiments." It found that, even after adjusting for respondents' reluctance to openly acknowledge any misgivings about specific leaders, Mr. Putin's popularity really is very high: around 70 percent.
During the 2015-16 recession, GDP. fell by more than 4 percent and real incomes declined by 10 percent. That is significant, but much less serious than, say, the 40 percent drop in GDP that Russia experienced during the first half of the 1990s. Despite a dramatic decline in oil prices and the burden of sanctions imposed by Western governments after the Crimea crisis, the Putin administration has managed to avert economic disaster by pursuing competent macroeconomic policies.
As the sanctions cut off Russia's access to global financial markets, the government set out to cover the budget deficit by undertaking major austerity measures and tapping its substantial sovereign funds. In early 2014, the Reserve Fund (created to mitigate fiscal shocks caused by drops in oil prices) and the National Welfare Fund (set up to address shortfalls in the pension system) together held the equivalent of 8 percent of GDP.
The government also adopted sound monetary policy, including the decision to fully float the ruble in 2014. Because of the decline in oil prices and large net capital outflows - caused by the need to repay external corporate debt and limited foreign investment in Russia - the currency depreciated by 50 percent within a year. Although a weaker ruble hurt the living standards of ordinary Russians, it boosted the competitiveness of Russia's companies. The Russian economy is now beginning to grow again, if very modestly - at a projected 1 to 1.5 percent per year over the next few years.
This performance comes nowhere near meeting Mr. Putin's election-campaign promises of 2012, when he projected GDP. growth at 6 percent per year for 2011-18. But it isn't catastrophic either, and the government has managed to explain it away.
Thanks partly to its near-complete control of the press, television and the internet, the government has developed a grand narrative about Russia's role in the world - essentially promoting the view that Russians may need to tighten their belts for the good of the nation. The story has several subplots. Russian speakers in Ukraine need to be defended against neo-Nazis. Russia supports President Bashar al-Assad of Syria because he is a rampart against the Islamic State, and it has helped liberate Aleppo from terrorists. Why would the Kremlin hack the Democratic Party in the United States? And who believes what the CIA says anyway?
The Russian people seem to accept much of this or not to care one way or the other. This should come as no surprise. In a recent paper based on data for 128 countries over 10 years, Professor Treisman and I developed an econometric model to assess which factors affect a government's approval ratings and by how much. We concluded that fully removing internet controls in a country like Russia today would cause the government's popularity ratings to drop by about 35 percentage points. ...
What Makes Governments Popular
Sergei M. Guriev (CEPR), Daniel Treisman (UCLA)
November 11, 2016
Dec 27, 2016 | economistsview.typepad.comRC AKA Darryl, RonRE: Democracy Is Dying as Technocrats Watch - William Easterly
Assaults on democracy are working because our current political elites have no idea how to defend it.
[There are certainly good points to this article, but the basic assumption that our electorally representative form of republican government is the ideal incarnation of the democratic value set is obviously incorrect. We have a dollar democracy that protects the economic interest of the elite class while more than willing to let working class families lose their homes and jobs on the back end of wide scale mortgage fraud. Then the fraud was perpetuated in the mortgage default process just to add insult to injury.
One thing that Trump certainly got wrong that no one ever points out is that there is a lot more murder than rape crossing the Mexican-American border in the drug cartel operations:<) ]
Peter K. -> RC AKA Darryl, Ron... December 27, 2016 at 06:39 AMThe author fails to mention the Sanders campaign. An elderly socialist Jew from Brooklyn was able to win 23 primaries and caucuses and approximately 43% of pledged delegates to Clinton's 55%.RC AKA Darryl, Ron said in reply to Peter K.... , -1
This despite a nasty, hostile campaign against him and his supporters by the Clinton campaign and corporate media.
There's also Jeremy Corbyn in the UK. Podemos, Syriza, etc.
Italy's 5 Star movement demonstrates a hostility to technocrats as well.
The author doesn't really focus on how the technocrats have failed.
The technocrats lied about how globalization would be great for everyone. People's actual experience in their lives has been different.
Trump scapegoated immigrants and trade, as did Brexit, but what he really did was channel hostility and hatred at the elites and technocrats running the country.
Centrist Democrat partisans with their increasinly ineffectual defenses of the establishment say it's only about racism and xenophobia, but it's more than that.Yes sir.
Dec 27, 2016 | www.usatoday.com
"Globalization has made the financial elite who donate to politicians very, very wealthy ... but it has left millions of our workers with nothing but poverty and heartache," Trump told supporters during a prepared speech targeting free trade in a nearly-shuttered former steel town in Pennsylvania.
In a speech devoted to what he called "How To Make America Wealthy Again," Trump offered a series of familiar plans designed to deal with what he called "failed trade policies" - including rejection of the proposed Trans-Pacific Partnership (TPP) with Pacific Rim nations and re-negotiation of the North American Free Trade Agreement (NAFTA) with Canada and Mexico, withdrawing from it if necessary.
The presumptive Republican presidential nominee also said he would pursue bilateral trade agreements rather than multi-national deals like TPP and NAFTA.
In addition to appointing better trade negotiators and stepping up punishment of countries that violate trade rules, Trump's plans would also target one specific economic competitor: China. He vowed to label China a currency manipulator, bring it before the World Trade Organization and consider slapping tariffs on Chinese imports coming into the U.S.
Dec 27, 2016 | economistsview.typepad.comJason Nordsell : , November 27, 2016 at 08:02 AMExcellent critique. Establishment Democrats are tone-deaf right now; the state of denial they live in is stunning. I'd like to think they can learn after the shock of defeat is over, but identity politics for non-white, non-male, non-heterosexual is what the Democratic party is about today and has been the last decade or so.bob -> Jason Nordsell... , November 28, 2016 at 03:02 PM
The only way Dems can make any headway by the midterms is if Trump really screws up, which is a tall order even for him. He will pick the low-hanging fruit (e.g., tax reform, Obamacare reform, etc), the economy will continue to recover (which will be attributed to Trump), and Dems will lose even more seats in Congress. And why? Because they refuse to recognize that whites from the middle-class and below are just as disadvantaged as minorities from the same social class.
If white privilege exists at all (its about as silly as the "Jews control the banks and media" conspiracy theories), it exists for the upper classes. Poor whites need help too. And young men in/out of college today are being displaced by women - not because the women have superior academic qualification, but because they are women. I've seen it multiple times firsthand in some of the country's largest companies and universities (as a lawyer, when an investigation or litigation takes place, I get to see everyone's emails, all the way to CEO/board). There is a concerted effort to hire only women and minorities, especially for executive/managerial positions. That's not equality.
That's the effect of incessant Dem propaganda pitting races and sexes against each other. This election exposed the media's role, but its not over. Fortunately, Krugman et al. are showing the Dems are too dumb to figure out why they lost. Hopefully they keep up their stupidity so identity politics can fade into history and we can get back to pursuing equality."There is a concerted effort to hire only women and minorities, especially for executive/managerial positions."Jason Nordsell -> bob... , November 29, 2016 at 10:17 AM
Goooooolllllllllllllly, gee. Now why would that be? I hope you're not saying there shouldn't be such an effort. This is a good thing. It exactly and precisely IS equality. It may be a bit harsh, but if certain folks continually find ways to crap of women and minorities, then public policies would seem warranted.
Are you seriously telling us that pursuing public policies to curb racial and sexual discrimination are a waste of time?
How, exactly, does your vision of "pursuit of equality" ameliorate the historical fact of discrimination?You don't make up for past discrimination with discrimination. You make up for it by equal application of the law. Today's young white men are not the cause of discrimination of the 20th century, or of slavery. If you discriminate against them because of the harm caused by other people, you're sowing the seeds of a REAL white nationalist movement. And Democrats' labeling of every Republican president/candidate as a Nazi - including Trump - is desensitizing the public to the real danger created by discriminatory policies that punish [white] children and young adults, particularly boys.Paid Minion -> bob... , December 26, 2016 at 01:29 PM
Displacement of white men by lesser-qualified women and minorities is NOT equality.So, to make up for the alleged screw job that women and minorities have supposedly received, the plan will be screwing white/hetro/males for the forseeable future. My former employer is doing this very plan, as we speak. Passed over 100 plus males, who have been turning wrenches on airplanes for years, and installed a female shop manager who doesn't know jack-$##t about fixing airplanes. No experience, no certificate......but she has a management degree. But I guess you don't know how to do the job to manage it.Richard -> Jason Nordsell... , November 30, 2016 at 03:45 PM
God forbid somebody have to "pay some dues" before setting them loose as suit trash.
This will not end well.You had me nodding until the last part.Todd : , November 27, 2016 at 08:46 AM
Back when cultural conservatives ruled the roost (not that long ago), they didn't pursue equality either. Rather, they favored (hetero Christian) white men. So hoping for Dem stupidity isn't going to lead to equality. Most likely it would go back to favoring hetero Christian white men."...should they find a new standard bearer that can win the Sunbelt states and bridge the divide with the white working class? I tend to think the latter strategy has the higher likelihood of success."Bill -> Todd... , November 27, 2016 at 08:59 AM
Easy to say. What would that standard bearer or that strategy look like?Bernie Sanders was that standard bearer, but Krugman and the Neoliberal establishment Democrats (ie. Super Delegates) decided that they wanted to coronate Clinton. Big mistake that we are now paying for...Bob Salsa -> Bill... , November 28, 2016 at 12:56 PMBasic political math - Sanders would have been eaten alive with his tax proposals by the GOP anti-tax propaganda machine on Trump steroids.dwb : , November 27, 2016 at 10:47 AM
His call to raise the payroll tax to send more White working class hard-earn money to Washington would have made election night completely different - Trump would have still won, it just wouldn't have been a surprise but rather a known certainty weeks ahead.Evolution of political parties happens organically, through evolution (punctuated equilibrium - like species and technology - parties have periods of stability with some sudden jumps in differentiation).swampwiz -> dwb... , November 28, 2016 at 12:59 AM
Old politicians are defeated, new ones take over. The old guard, having been successful in the past in their own niche rarely change.
If Nancy Pelosi is re-elected (highly likely), it will be the best thing to happen to Republicans since Lincoln. They will lose even more seats.
The Coastal Pelosi/Schumer wing is still in power, and it will take decimation at the ballot box to change the party. The same way the "Tea Party" revolution decimated the Republicans and led to Trump. Natural selection at work.
In 1991, Republicans thought they would always win, Democrats thought the country was relegated to Republican Presidents forever. Then along came a new genotype- Clinton. In 2012, Democrats thought that they would always win, and Republicans were thought to be locked out of the electoral college. Then along came a new genotype, Trump.
A new genotype of Democrat will have to emerge, but it will start with someone who can win in flyover country and Texas. Hint: They will have to drop their hubris, disdain and lecturing, some of their anti-growth energy policies, hate for the 2nd amendment, and become more fiscally conservative. They have to realize that *no one* will vote for an increase in the labor supply (aka immigration) when wages are stagnant and growth is anemic. And they also have to appreciate people would rather be free to choose than have decisions made for them. Freedom means nothing unless you are free to make mistakes.
But it won't happen until coastal elites like Krugman and Pelosi have retired.
My vote for the Democratic Tiktaalik is the extraordinarily Honorable John Bel Edwards, governor of Louisiana. The central fact of the election is that Hillary has always been extraordinarily unlikable, and it turned out that she was Nixonianly corrupt (i.e., deleted E-mails on her illegal private server) as well - and she still only lost by 1% in the tipping point state (i.e., according to the current count, which could very well change).bob -> dwb... , November 28, 2016 at 03:09 PMYou know what will win Texas? Demographic change. Economic growth. And it is looking pretty inevitable on both counts.dwb -> bob... , November 28, 2016 at 06:27 PM
I'm also pretty damned tired of being dismissed as "elitist", "smug" and condescending. I grew up in a red state. I know their hate. I know their condescension (they're going to heaven, libruls are not).
It cuts both ways. The Dems are going into a fetal crouch about this defeat. Did the GOP do that after 2008? Nope. They dug in deeper.
Could be a lesson there for us.
Smugly your,Ahh yes, all Texas needs is demographic change, because all [Hispanics, Blacks, insert minority here] will always and forever vote Democrat. Even though the Democrats take their votes for granted and Chicago/Baltimore etc. are crappy places to live with no school choice, high taxes, fleeing jobs, and crime. Even though Trump outperformed Romney among minorities.Jason Nordsell -> bob... , November 29, 2016 at 10:27 AM
Clinton was supposed to be swept up in the winds of demographics and the Democrats were supposed to win the White House until 2083.
Funny things happen when you take votes for granted. Many urban areas are being crushed by structural deficits and need some Detroit type relief. I predict that some time in the next 30 years, poles reverse, and urban areas are run by Republicans.
If you are tired of being dismissed as "elitist", "smug" and condescending, don't be those things. Don't assume people will vote for your party because they have always voted that way, or they are a certain color. Respect the voters and work to earn it.The notion that hispanic=democrat that liberals like bob have is hopelessly ignorrant.RJ -> bob... , December 06, 2016 at 11:20 PM
I'm from Dallas. Three of my closest friends growing up (and to this day), as well as my brother in law, are hispanic. They, and their families, all vote Republican, even for Trump. Generally speaking, the longer hispanics are in the US, the more likely they tend to vote Republican.
The Democratic Party's plan to wait out the Republicans and let demographics take over is ignorant, racist and shortsighted, cooked up by coastal liberals that haven't got a clue, and will ultimately fail.
In addition to losing hispanics, Democrats will also start losing the African American vote they've been taking for granted the last several decades. Good riddance to the Democratic party, they are simply unwilling to listen to what the people want.You might be tired of it, but clearly you are elitist, smug, and condescending.Tom : , November 27, 2016 at 11:42 AM
Own it. Fly your freak flag proudly,This is a really shoddy piece that repeats the medias pulling of Clintons quote out of context. She also said "that other basket of people are people who feel that the government has let them down, the economy has let them down, nobody cares about them, nobody worries about what happens to their lives and their futures, and they're just desperate for change. It doesn't really even matter where it comes from. They don't buy everything he says, but he seems to hold out some hope that their lives will be different. They won't wake up and see their jobs disappear, lose a kid to heroin, feel like they're in a dead-end. Those are people we have to understand and empathize with as well."dwb -> Tom... , November 27, 2016 at 12:07 PM
Now maybe it is okay to make gnore this part of the quote because you think calling racism "deplorable" is patently offensive. But when the ignored context makes the same points that Duy says she should have been making, that is shoddy.There are zero electoral college votes in the State of Denial. Hopefully you understand a)the difference between calling people deplorable and calling *behavior* deplorable; b) Godwin's Law: when you resort to comparing people to Hitler you've lost the argument. Trump supporters were not racist, homophobic, xenophobic, or any other phobic. As a moderate, educated, female Trump supporter counseled: He was an a-hole, but I liked his policies.Nick : , November 27, 2016 at 01:16 PM
Even my uber liberal friends cannot tell me what Clinton's economic plan was. Only that they are anti-Trump.
Trump flanked Clinton on the most popular policies (the left used to be the anti-trade party of union Democrats): Lower regulation, lower taxes, pro-2nd amendment, trade deals more weighted in favor of US workers, and lower foreign labor supply. Turn's out, those policies are sufficiently popular that people will vote for them, even when packaged into an a-hole. Trump's anti-trade platform was preached for decades by rust belt unions.
The coastal Democrats have become hostages to pro-big-government municipal unions crushing cities under structural deficits, high taxes, poorly run schools, and overbearing regulations. The best thing that can happen for the Democrats is for the Republicans to push for reforms of public pensions, school choice, and break municipal unions. Many areas see the disaster in Chicago and Baltimore, run by Democrats for decades, and say no thank you. Freed of the need to cater to urban municipal unions, Democrats may be able to appeal to people elsewhere.Where can you move to for a job when wages are so low compared to rents?Giant_galveston -> Tim C.... , December 05, 2016 at 08:43 PM
The young generations are not happy with house prices or rents as well.
Tim, I believe you've missed the point: by straightforward measures, Democratic voters in USA are substantially under-represented. The problem is likely to get much worse, as the party whose policies abet minority rule now controls all three branches of the federal government and a substantial majority of state governments.Tim C. : , November 27, 2016 at 02:50 PMThis is an outstanding takedown on what has been a never-ending series of garbage from Krugman.dazed and confused : , November 27, 2016 at 02:58 PM
I used to hang on every post he'd made for years after the 2008 crisis hit. But once the Clinton coronation arose this year, the arrogant, condescending screed hit 11 - and has not slowed down since. Threads of circular and illogical arguments have woven together pathetic - and often non-liberal - editorials that have driven me away permanently.
Since he's chosen to ride it all on political commentary, Krugman's credibility is right there with luminaries such as Nial Ferguson and Greg Mankiw.
Seems that everyone who chooses to hitch their wagon to the Clintons ends up covered in bilge..... funny thing about that persistent coincidence..."And it is an especially difficult pill given that the decline was forced upon the white working class.... The tsunami of globalization washed over them....in many ways it was inevitable, just as was the march of technology that had been eating away at manufacturing jobs for decades. But the damage was intensified by trade deals.... Then came the housing crash and the ensuing humiliation of the foreclosure crisis."Jesse : , November 27, 2016 at 04:29 PM
All the more amazing then that Trump pulled out such a squeaker of an election beating Clinton by less than 2% in swing states and losing the popular vote overall. In the shine of Duy's lights above, I would have imagined a true landslide for Trump... Just amazing.dimknight : , November 27, 2016 at 11:48 PM
The Democratic Establishment and their acolytes are caught in a credibility trap."I don't know that the white working class voted against their economic interest".Doug Rife : , November 28, 2016 at 07:17 AM
I think you're pushing too hard here. Democrats have been for, and Republicans against many policies that benefit the white working class: expansionary monetary policy, Obamacare, housing refinance, higher minimum wage, tighter worker safety regulation, stricter tax collection, and a host of others.
I also think many Trump voters know they are voting against their own economic interest. The New York Times interviewed a number who acknowledge that they rely on insurance subsidies from Obamacare and that Trump has vowed to repeal it. I know one such person myself. She doesn't know what she will do if Obamacare is repealed but is quite happy with her vote.There is zero evidence for this theory. It ignores the fact that Trump lied his way to the White House with the help of a media unwilling to confront and expose his mendacity. And there was the media's obsession with Clinton's Emails and the WikiLeaks daily release of stolen DNC documents. And finally the Comey letter which came in the middle of early voting keeping the nation in suspense for 11 days and which was probably a violation of the hatch act. Comey was advised against his unjustified action by higher up DOJ officials but did it anyway. All of these factors loomed much larger than the deplorables comment. Besides, the strong dollar fostered by the FOMC's obsession with "normalization" helped Trump win because the strong dollar hurts exporters like farmers who make up much of the rural vote as well as hurting US manufacturing located in the midwest states. The FOMC was objectively pro Trump.Nate F : , November 28, 2016 at 07:57 AMI was surrounded by Trump voters this past election. Trust me, an awful lot of them are deplorable. My father is extremely anti semetic and once warned me not to go to Minneapolis because of there being "too many Muslims." One of our neighbors thinks all Muslims are terrorists and want to do horrible things to all Christians.Giant_galveston -> Nate F... , December 05, 2016 at 08:38 PM
I know, its not a scientific study. But I've had enough one on one conversations with Trump supporters (not just GOP voters, Trump supporters) to say that yes, as a group they have some pretty horrible views.Yep. I've got plenty of stories myself. From the fact that there are snooty liberals it does NOT follow that the resentment fueling Trump's support is justified.Denis Drew : , November 28, 2016 at 08:41 AMOne should note that the "The racist, sexist, homophobic, xenophobic, Islamaphobic - you name it ... " voted for Obama last time around.Gary Anderson : , November 28, 2016 at 09:47 AM
When the blue collar voter (for lack of a better class) figures out that the Republicans (Trump) are not going to help them anymore than the Dems did -- it will be time for them to understand they can only rely on themselves, namely: through rebuilding labor union density, which can be done AT THE STATE BY PROGRESSIVE STATE LEVEL.
To keep it simple states may add to federal protections like the minimum wage or safety regs -- just not subtract. At present the NLRB has zero (no) enforcement power to prevent union busting (see Trump in Vegas) -- so illegal labor market muscling, firing of organizers and union joiners go completely undeterred and unrecoursed.
Recourse, once we get Congress back might include mandating certification elections on finding of union busting. Nothing too alien: Wisconsin, for instance, mandates RE-certification of all public employee unions annually.
Progressive states first step should be making union busting a felony -- taking the power playing in our most important and politically impacting market as seriously as taking a movie in the movies (get you a couple of winters). For a more expansive look (including a look at the First Amendment and the fed cannot preempt something with nothing, click here):
Labor unions -- returned to high density -- can act as the economic cop on every corner -- our everywhere advocates squelching such a variety of unhealthy practices as financialization, big pharam gouging, for profit college fraud (Trump U. -- that's where we came into this movie). 6% private union density is like 20/10 bp; it starves every other healthy process (listening blue collar?).
Don't panic if today's Repub Congress passes national right-to-work legislation. Germany, which has the platinum standard labor institutions, does not have one majority union (mostly freeloaders!), but is almost universally union or covered by union contracts (centralized bargaining -- look it up) and that's what counts.Trump took both sides of every issue. He wants high and low interest rates. He wants a depression first, (Bannonomics) and inflation first, (Trumponomics), he wants people to make more and make less. He is nasty and so he projected that his opponent was nasty.C Jones : , November 28, 2016 at 10:31 AM
Now he has to act instead of just talk out of both sides of his mouth. That should not be as easy to do.Hi Tim, nice post, and I particularly liked your last paragraph. The relevant question today if you have accepted where we are is effectively: 'What would you prefer - a Trump victory now? Or a Trump type election victory in a decade or so? (with todays corresponding social/economic/political trends continuing).Bob Salsa : , November 28, 2016 at 12:48 PM
I'm a Brit so I was just an observer to the US election but the same point is relevant here in the UK - Would I rather leave the EU now with a (half sensible) Tory government? Or would I rather leave later on with many more years of upheaval and a (probably by then quite nutty) UKIP government?
I know which one I prefer - recognise the protest vote sooner, rather than later.Sure they're angry, and their plight makes that anger valid.Lars : , November 28, 2016 at 05:58 PM
However, not so much their belief as to who and what caused their plight, and more importantly, who can and how their plight would be successfully reversed.
Most people have had enough personal experiences to know that it is when we are most angry that we do the stupidest of things.Krugman won his Nobel for arcane economic theory. So it isn't terribly surprising that he spectacularly fails whenever he applies his brain to anything remotely dealing with mainstream thought. He is the poster boy for condescending, smarter by half, elite liberals. In other words, he is an over educated, political hack who has yet to learn to keep his overtly bias opinions to himself.Douglas P Anthony : , November 29, 2016 at 08:16 AMTim's narrative felt like a cold shower. I was apprehensive that I found it too agreeable on one level but were the building blocks stable and accurate?JohnR : , November 29, 2016 at 12:07 PM
Somewhat like finding a meal that is satisfying, but wondering later about the ingredients.
But, like Tim's posts on the Fed, they prompt that I move forward to ponder the presentation and offer it to others for their comment. At this time, five-stars on a 1-5 system for bringing a fresh approach to the discussion. Thanks, Professor Duy. This to me is Piketty-level pushing us onto new ground.Funny how there's all this concern for the people whose jobs and security and money have vanished, leaving them at the mercy of faceless banks and turning to drugs and crime. Sad. Well, let's bash some more on those lazy, shiftless urban poors who lack moral strength and good, Protestant work ethic, shall we?Raven Onthill : , November 29, 2016 at 04:12 PMClinton slammed half the Trump supporters as deplorables, not half the public. She was correct; about half of them are various sorts of supremacists. The other half (she said this, too) made common cause with the deplorables for economic reasons even though it was a devil's bargain.Rick McGahey : , November 30, 2016 at 02:44 PM
Now, there's a problem with maternalism here; it's embarrassing to find out that the leader of your political opponents knows you better than you know yourself, like your mother catching you out in a lie. It was impolitic for Clinton to have said this But above all remember that when push came to shove, the other basket made common cause with the Nazis, the Klan, and so on and voted for a rapey fascist."Economic development" isn't (and can't) be the same thing as bringing back lost manufacturing (or mining) jobs. We have had 30 years of shifting power between labor and capital. Restoring labor market institutions (both unions and government regulation) and raising the floor through higher minimum wages, single payer health care, fair wages for women and more support for child and elder care, trade policies that care about working families, better safe retirement plans and strengthened Social Security, etc. is key here, along with running a real full employment economy, with a significant green component. See Bob Polllin's excellent program in https://mitpress.mit.edu/books/back-full-employmentSandra Williams : , December 01, 2016 at 12:20 AM
That program runs up against racism, sexism, division, and fear of government and taxation, and those are powerful forces. But we don't need all Trump supporters. We do need a real, positive economic program that can attract those who care about the economics more than the cultural stuff.How about people of color drop the democrats and their hand wringing about white people when they do nothing about voter suppression!! White fragility is nauseating and I'm planning to arm myself and tell all the people of color I know to do the same. I expect nothing from the democrats going forward.Robert Hurley : , December 01, 2016 at 11:04 AMI have never commented here but I will now because of the number of absurd statements. I happen to work with black and Hispanic youth and have also worked with undocumented immigrants. To pretend that trump and the Republican Party has their interest in mind is completely absurd. As for the white working class, please tell me what programs either trump or the republican have put forward to benefit them? I have lost a lot of respect for DuyGiant_galveston -> Robert Hurley... , December 05, 2016 at 08:32 PMCouldn't agree more.RJ -> Robert Hurley... , December 06, 2016 at 11:26 PMNo one should advocate illegal immigration. If you care about being a nation of email@example.com : , December 01, 2016 at 06:13 PMI think much of appeal of DJT was in his political incorrectness. PC marginalises. Very. Of white working class specifically. it tells one, one cannot rely on one's ideas any more. In no uncertain terms. My brother, who voted for Trump, lost his job to PC without offending on purpose, but the woman in question felt free to accuse him of violating her, with no regard to his fate. He was never close enough to do that. Is that not some kind of McCarthyism?Eclectic Observer : , December 05, 2016 at 10:55 AMJust to be correct. Clinton was saying that half (and that was a terrible error-should have said "some") were people that were unreachable, but that they had to communicate effectively with the other part of his support. People who echo the media dumb-ing down of complex statements are part of the problem.Procopius : , December 05, 2016 at 08:40 PM
Still, I believe that if enough younger people and african-americans had come out in the numbers they did for Obama in some of those states, Clinton would have won. Certainly, the media managed to paint her in more negative light than she objectively deserved-- even if she deserved some negatives.
I am in no way a fan of HRC. Still, the nature of the choice was blurred to an egregious degree."The tough reality of economic development is that it will always be easier to move people to jobs than the jobs to people."Kim Kaufman : , December 07, 2016 at 10:03 PM
This is indisputable, but I have never seen any discussion of the point that moving is not cost-free. Back in the '90s I had a discussion with a very smart person, a systems analyst, who insisted that poor people moved to wherever the welfare benefits were highest.
I tried to point out that moving from one town to another costs more than a bus ticket. You have to pay to have your possessions transported. You have to have enough cash to pay at least two months' rent and maybe an additional security deposit.
You have to have enough cash to pay for food for at least one month or however long it takes for your first paycheck or welfare check to come in. There may be other costs like relocating your kids to a new school system and maybe changing your health insurance provider.
There probably are other costs I'm not aware of, and the emotional cost of leaving your family and your roots. The fact that some people succeed in moving is a great achievement. I'm amazed it works at all in Europe where you also have the different languages to cope with.I'm not sure the Hillary non-voters - which also include poor black neighborhoods - were voting against their economic interests. Under Obama, they didn't do well. Many of them were foreclosed on while Obama was giving the money to the banks. Jobs haven't improved, unless you want to work at an Amazon warehouse or for Uber and still be broke. Obama tried to cut social security. He made permanent Bush's tax cuts for the rich. Wars and more wars. Health premiums went up - right before the election. The most Obama could say in campaigning for Hillary was "if you care about my legacy, vote for Hillary." He's the only one that cares about his legacy. I don't know that it's about resentment but about just having some hope for economic improvement - which Trump offered (no matter how shallow and deceptive) and Hillary offered nothing but "Trump's an idiot and I'm not."IHiddenDragon : , December 10, 2016 at 09:01 AM
I believe Bernie would have beat Trump's ass if 1) the DNC hadn't put their fingers on the scale for Hillary and 2) same with the media for Hillary and Trump. The Dems need more than some better campaign slogans. They really need a plan for serious economic equality. And the unions need to get their shit together and stop thinking that supporting corrupt corporate Dems is working. Or perhaps the rank and file need to get their shit together and get rid of union bosses.The keys of the election were race, immigration and trade. Trump won on these points. What dems can do is to de-emphasize multiculturalism, racial equality, political correctness etc. Instead, emphasize economic equality and security, for all working class.IHiddenDragon : , December 10, 2016 at 09:05 AM
Lincoln billed the civil war as a war to preserve the union, to gain wide support, instead of war to free slaves. Of course, the slaves were freed when the union won the war. Dems can benefit from a similar strategyKrugman more or less blames media, FBI, Russia entirely for Hillary's loss, which I think is wrong. As Tim said, Dems have long ceased to be the party of the working class, at least in public opinion, for legitimate reasons.Jesse : , December 26, 2016 at 11:08 AM
Besides, a lot voters are tired of stale faces and stale ideas. They yearn something new, especially the voters in deep economic trouble.
Maybe it's time to try some old fashioned mercantilism, protectionism? America first is an appealing idea, in this age of mindless globalization.All Mr. Krugman and the Democratic establishment need to do is to listen, with open ears and mind, to what Thomas Frank has been saying, and they will know where they went wrong and most likely what to do about it, if they can release themselves from their fatal embrace with Big Money covered up by identity politics.c1ue : , December 26, 2016 at 12:11 PM
But they cannot bring themselves to admit their error, and to give up their very personally profitable current arrangement. And so they are caught up in a credibility trap which is painfully obvious to the objective observer.Pretty sad commentary by neoliberal left screaming at neoliberal right and vice versa.
It seems quite clear that the vast majority of commenters live as much in the ivory tower/bubble as is claimed for their ideological opponent.
It is also quite interesting that most of these same commenters don't seem to get that the voting public gets what the majority of it wants - not what every single group within the overall population wants.
The neoliberals with their multi-culti/love them all front men have had it good for a while, now there's a reaction. Deal with it.
RC AKA Darryl, Ron : , December 18, 2016 at 07:18 AMThis Russian hacking thing is being discussed entirely out of realistic context.RGC -> RC AKA Darryl, Ron... , December 18, 2016 at 07:57 AM
Cyber security is a serious risk management operation that firms and governments spend outrageous sums of money on because hacking attempts, especially from sources in China and Russia, occur in vast numbers against every remotely desirable target corporate or government each and every day. At my former employer, the State of Virginia, the data center repelled over two million hacking attempts from sources in China each day. Northrop Grumman, the infrastructure management outsourcer for the State of Virginia's IT infrastructure, has had no known intrusions into any Commonwealth of Virginia servers that had been migrated to their standard security infrastructure thus far since the inception of their contract in July 2006. That is almost the one good thing that I have to say about NG. Some state servers, notably the Virginia Department of Health Professions, not under protection of the NG standard network security were hacked and had private information such as client SSNs stolen. Retail store servers are hacked almost routinely, but large banks and similarly well protected corporations are not. Security costs and it costs a lot.
Even working in a data center with an excellent intrusion protection program as part of that program I had to take an annual "securing the human" computer based training class. Despite all of the technical precautions we were retrained each year to among other things NEVER put anything in an E-Mail that we did not want to be available for everyone to read; i.e., to never assume privacy is protected in an E-Mail. Embarrassing E-Mails need a source. We should assume that there will always be a hacker to take advantage of our mistakes.Can you spell "diversion"?RC AKA Darryl, Ron -> RGC... , December 18, 2016 at 08:09 AM
Sanders: "Break up the banks!"
Trump: "The elites are screwing you over!"
Supporters of the status quo:
"It's Russian hackers"
Whatever it takes to change the subject.Maybe it is diversion, but it is definitely uninformed if not just plain stupid.sglover -> RC AKA Darryl, Ron... , December 18, 2016 at 06:11 PMAbsolutely. What does that suggest about Team Dem?DrDick -> EMichael... , December 18, 2016 at 08:34 AMThe reality is that all the major world powers (and some minor ones), including us, do this routinely and always have. While it is entirely appropriate to be outraged that it may have materially determined the election (which I think is impossible to know, though it did have some impact), we should not be shocked or surprised by this.RC AKA Darryl, Ron -> EMichael... , December 18, 2016 at 09:55 AM"...I would suggest attacks on Putin's personal business holdings all over the world..."RC AKA Darryl, Ron -> EMichael... , December 18, 2016 at 10:22 AM
[My guess is that has been being done a long time ago considering the direction of US/Russian foreign relations over NATO expansion, the Ukraine, and Syria.
Long before TCP/IP the best way to prevent dirty secrets from getting out was not to have dirty secrets. It still works.
The jabbering heads will not have much effect on the political opinions of ordinary citizens because 40 million or more US adults had their credit information compromised by the Target hackers three years ago. Target had been saving credit card numbers instead of deleting them as soon as they obtained authorizations for transfers, so that the 40 million were certainly exposed while more than twice that were probably exposed. Establishment politicians having their embarrassing E-mails hacked is more like good fun family entertainment than something to get all riled up about.]
Target: Hacking hit up to 110 million customersVoting machines are public and for Federal elections then tampering with them is elevated to a Federal crime. Political parties are private. The Federal government did not protect Target or Northrop Grumman's managed infrastructure for the Commonwealth of Virginia although either one can take forensic information to the FBI that will obtain warrants for prosecution. Foreign criminal operations go beyond the immediate domestic reach of the FBI. Not even Interpol interdicts foreign leaders unless they are guilty of genocide, crimes against humanity or war crimes.RC AKA Darryl, Ron -> EMichael... , December 18, 2016 at 10:43 AM
The Federal government can do what it will as there are not hard guidelines for such clandestine operations and responses. Moreover, there are none to realistically enforce against them, which inevitably leads to war given sufficient cycles of escalation. Certainly our own government has done worse (political assassinations and supporting coups with money and guns) with impunity merely because of its size, reach, and power.BTW, "the burglar that just ransacked your house" can be arrested and prosecuted by a established regulated legal system with absolutely zero concerns of escalating into a nuclear war, trade war, or any other global hostility. So, not the same thing at all. Odds are good though that the burglar will get away without any of that because when he does finally get caught it will be an accident and probably only after dozen if not hundreds of B&E's.RC AKA Darryl, Ron -> RC AKA Darryl, Ron... , December 18, 2016 at 11:01 AM
There is a line. The US has crossed that line, but always in less developed countries that had no recourse against us. Putin knows where the line is with the US. He will dance around it and lean over it, but not cross it. We have him outgunned and he knows it. Putin did not tamper with an election, a government function. Putin tampered with private data exposing incriminating information against a political party, which is a private entity rather than government entity. Whatever we do should probably stay within the rule of law as it gets messy fast once outside those boundaries.As far as burglars go I live in a particular working class zip code that has very few burglaries. It is a bad risk/reward deal unless you are just out to steal guns and then you better make sure that no one is home. Most people with children still living at home also have a gun safe. Most people have dogs.Peter K. -> DrDick... , December 18, 2016 at 09:21 AM
There are plenty burglaries in a lower income zip code nearby and lots more in higher income zip codes further away, the former being targets of opportunity with less security and possible drug stashes, which has a faster turnover than fencing big screen TV's. High income neighborhoods are natural targets with jewelry, cash, credit cards, and high end electronics, but far better security systems. I don't know much about their actual crime stats because they are on the opposite side of the City of Richmond VA from me, but I used to know a couple of burglars when I lived in the inner city. They liked the upscale homes near the University of Richmond on River Road.Putin was mad b/c Clinton interfered in Russia's election using the bully-pulpit.DeDude -> Peter K.... , December 18, 2016 at 09:43 AM
She may have been complete correct in what she was saying, but it's not surprising she pissed Putin off.
The Democratic establishment would rather discuss this than do a post-mortem on Hillary's campaign.
They kept telling us the e-mail didn't reveal anything and now they say the e-mail determined the election.
"They kept telling us the e-mail didn't reveal anything and now they say the e-mail determined the election"Peter K. -> DeDude... , December 18, 2016 at 09:54 AM
And those two statement are not in conflict unless you are a brain dead Fox bot. Big nothing-burgers like Bhengazi or trivial emails can easily be blown up and affect a few hundred thousand voters. When the heck are you going to grow up and get past your 5 stages of Sanders grief?"Big nothing-burgers like Bhengazi or trivial emails can easily be blown up and affect a few hundred thousand voters. "EMichael -> DeDude... , December 18, 2016 at 09:55 AM
There is already an audience for those faux scandals, the Fox viewers.
They don't create new Voters.
You're nothing but a brainwashed partisan Democrat, a mirror-image of these brainwashed Fox viewers.
You're told what you're supposed to think by the Party leadership and you eat it up.
No critical thinking skills.
He's barely over Nader.DeDude -> EMichael... , December 18, 2016 at 10:07 AMI know - and there used to be some signs of a functional brain. Now it is all "they are all the same" ism and Hillary derangement syndrome on steroids. Someone who cares need to do an intervention before it becomes he get gobbled up by "ilsm" ism.Peter K. -> EMichael... , December 18, 2016 at 01:08 PMNader's critique was correct.im1dc -> RC AKA Darryl, Ron... , December 18, 2016 at 08:56 AM
The Democrats moved to the right and created more Trump voters.ABC video interview by Martha Raddatz of Donna Brazile 2:43im1dc -> im1dc... , December 18, 2016 at 08:59 AM
Adding the following FACTS, not opinion, to the Russian Hacking debate at the DNC
Russian hacks of the DNC began at least as early as April, the FBI informed the DNC in May of the hacks, NO ONE in the FedGovt offered to HELP the DNC at anytime (allowed it to continue), and Russia's Putin DID NOT stop after President Obama told Putin in September to "Cut it Out", despite Obama's belief otherwise
"DNC Chair Says Russian Hackers Attacked The Committee Through Election Day"
'That goes against Obama's statement that the attacks ended after he spoke to Putin in September'
by Dave Jamieson Labor Reporter...The Huffington Post...12/18/2016...10:59 am ET
"The chair of the Democratic National Committee said Sunday that the DNC was under constant cyber attack by Russian hackers right through the election in November. Her claim contradicts President Barack Obama's statement Friday that the attacks ended in September after he issued a personal warning to Russian President Vladimir Putin.
"No, they did not stop," Donna Brazile told Martha Raddatz on ABC's "This Week." "They came after us absolutely every day until the end of the election. They tried to hack into our system repeatedly. We put up the very best cyber security but they constantly [attacked]."
Brazile said the DNC was outgunned in its efforts to fend off the hacks, and suggested the committee received insufficient protection from U.S. intelligence agencies. The CIA and FBI have reportedly concluded that Russians carried out the attacks in an effort to help Donald Trump defeat Hillary Clinton.
"I think the Obama administration ― the FBI, the various other federal agencies ― they informed us, they told us what was happening. We knew as of May," Brazile said. "But in terms of helping us to fight, we were fighting a foreign adversary in the cyberspace. The Democratic National Committee, we were not a match. And yet we fought constantly."
In a surprising analogy, Brazile compared the FBI's help to the DNC to that of the Geek Squad, the tech service provided at retailer Best Buy ― which is to say well-meaning, but limited.
"They reached out ― it's like going to Best Buy," Brazile said. "You get the Geek Squad, and they're great people, by the way. They reached out to our IT vendors. But they reached us, meaning senior Democratic officials, by then it was, you know, the Russians had been involved for a long time."..."This new perspective and set of facts is more than distressing it details a clear pattern of Executive Branch incompetence, malfeasance, and ineptitude (perhaps worse if you are conspiratorially inclined)im1dc -> im1dc... , -1The information above puts in bold relief President Obama's denial of an Electoral College briefing on the Russian Hacks
There is now no reason not to brief the Electors to the extent and degree of Putin's help for demagogue Donald
Dec 27, 2016 | economistsview.typepad.com
Fred C. Dobbs -> Peter K.... December 26, 2016 at 07:15 AM neopopulism: A cultural and political movement, mainly in Latin American countries, distinct from twentieth-century populism in radically combining classically opposed left-wing and right-wing attitudes and using electronic media as a means of dissemination. (Wiktionary)
Dec 26, 2016 | economistsview.typepad.com
ilsm -> pgl... December 26, 2016 at 05:12 AM
"What is good for wall st. is good for America". The remains of the late 19th century anti trust/regulation momentum are democrat farmer labor wing in Minnesota, if it still exists. An example: how farmers organized to keep railroads in their place. Today populists are called deplorable, before they ever get going.
And US' "libruls" are corporatist war mongers.
Used to be the deplorable would be the libruls!
likbez -> pgl...
I browsed it and see more of less typical pro-neoliberal sentiments, despite some critique of neoliberalism at the end.
This guy does not understand history and does not want to understand. He propagates or invents historic myths. One thing that he really does not understand is how WWI and WWII propelled the USA at the expense of Europe. He also does not understand why New Deal was adopted and why the existence of the USSR was the key to "reasonable" (as in "not self-destructive" ) behaviour of the US elite till late 70th. And how promptly the US elite changed to self-destructive habits after 1991. In a way he is a preacher not a scientist. So is probably not second rate, but third rate thinker in this area.
While Trump_vs_deep_state (aka "bastard neoliberalism") might not be an answer to challenges the USA is facing, it is definitely a sign that "this time is different" and at least part of the US elite realized that it is too dangerous to kick the can down the road. That's why Bush and Clinton political clans were sidelined this time.
There are powerful factors that make the US economic position somewhat fragile and while Trump is a very questionable answer to the challenges the USA society faces, unlike Hillary he might be more reasonable in his foreign policy abandoning efforts to expand global neoliberal empire led by the USA.
Efforts which led to impoverishment of lower 80% the USA population with a large part of the US population living in a third world country. This "third world country" includes Wal-Mart and other retail employees, those who have McJobs in food sector, contractors, especially such as Uber "contractors", Amazon packers. This is a real third world country within the USA and probably 50% population living in it.
Add to this the decline of the US infrastructure due to overstretch of imperial building efforts (which reminds British empire troubles).
I see several factors that IMHO make the current situation dangerous and unsustainable, Trump or no Trump:
1. Rapid growth of population. The US population doubled in less them 70 years. Currently at 318 million, the USA is the third most populous country on earth. That spells troubles for democracy and ecology, to name just two. That might also catalyze separatists movements with two already present (Alaska and Texas).
2. Plato oil. While conversion of electricity supply from coal to wind and solar was more or less successful (much less then optimists claim, because it requires building of buffer gas powered plants and East-West high voltage transmission lines), the scarcity of oil is probably within the lifespan of boomers. Let's say within the next 20 years. That spells deep trouble to economic growth as we know it, even with all those machinations and number racket that now is called GDP (gambling now is a part of GDP). And in worst case might spell troubles to capitalism as social system, to say nothing about neoliberalism and neoliberal globalization. The latter (as well as dollar hegemony) is under considerable stress even now. But here "doomers" were wrong so often in the past, that there might be chance that this is not inevitable.
3. Shale gas production in the USA is unsustainable even more then shale oil production. So the question is not if it declines, but when. The future decline (might be even Seneca Cliff decline) is beyond reasonable doubt.
4. Growth of automation endangers the remaining jobs, even jobs in service sector . Cashiers and waiters are now on the firing line. Wall Mart, Shop Rite, etc, are already using automatic cashiers machines in some stores. Wall-Mart also uses automatic machines in back office eliminating staff in "cash office".
Waiters might be more difficult task but orders and checkouts are computerized in many restaurants. So the function is reduced to bringing food. So much for the last refuge of recent college graduates.
The successes in speech recognition are such that Microsoft now provides on the fly translation in Skype. There are also instances of successful use of computer in medical diagnostics. https://en.wikipedia.org/wiki/Computer-aided_diagnosis
IT will continue to be outsourced as profits are way too big for anything to stop this trend.
Dec 26, 2016 | economistsview.typepad.comLincoln / McKinley tariffs...Economists are still oblivious to the devastation created by 40 years of free trade.pgl -> Lincoln / McKinley tariffs ... , December 26, 2016 at 11:25 AM
Someone needs to buy Paul Krugman a one way ticket to Camden and have him hang around the devastated post-industrial hell scape his policies helped create.
Krugman should be temporarily barred from public discourse until he apologizes for pushing NAFTA and all the rest. Hundreds of millions of people were thrust into dire poverty because of the horrible free trade policies he and 99.9% of US economists pushed.
They have learned nothing and they have forgotten much.Oh yea - bring on the tariffs which will lead to a massive appreciation of the dollar. Which in turn will lead to massive reductions in US exports. I guess our new troll is short selling Boeing.likbez -> pgl, -1I tend to agree with you. Extremes meet: extreme protectionism is close to extreme neoliberal globalization in the level of devastation, that can occur.
But please do not forget that Krugman is a neoliberal stooge and this is much worse then being protectionist. This is close to betrayal of the nation you live it, people you live with, if you ask me.
To me academic neoliberals after 2008 are real "deplorables". And should be treated as such, despite his intellect. There not much honor in being an intellectual prostitute of financial oligarchy that rules the country.
Dec 26, 2016 | economistsview.typepad.comlikbez -> EMichael... December 26, 2016 at 04:20 PM"Then of course, it is easy to attack the neoliberals, they'll actually let you talk."
That's funny. Neoliberals are closet Trotskyites and they will let you talk only is specially designated reservations, which are irrelevant (or, more correctly, as long as they are irrelevant) for swaying the public opinion.
They are all adamant neo-McCarthyists, if you wish and will label you Putin stooge in no time [, if you try to escape the reservation].
If you think they are for freedom of the press, you are simply delusional. They are for freedom of the press for those who own it.
Try to get dissenting views to MSM or academic magazines. Yes, they will not send you to GULAG, but the problem is that ostracism works no less effectively. That the essence of "inverted totalitarism" (another nickname for neoliberalism). You can substitute physical repression used in classic totalitarism with indirect suppression of dissenting opinions with the same, or even better results. Note that even the term "neoliberalism" is effectively censored and not used by MSM.
See Sheldon Wolin writings about this.
And the resulting level of suppressing of opposition (which is the essence of censorship) is on the level that would make the USSR censors blush. And if EconomistView gets too close to anti-neoliberal platform it will instantly find itself in the lists like PropOrNot
[Dec 26, 2016] The Democratic Party as a Party (Sanders was an outlier) has nothing to do with fair and equal play for all. This is a party of soft neoliberals and it adheres to Washington
"... The Democratic Party as a Party (Sanders was an outlier) has nothing to do with "fair and equal play for all". This is a party of soft neoliberals and it adheres to Washington consensus no less then Republicans. https://en.wikipedia.org/wiki/Washington_Consensus ..."
"... If you read the key postulates it is clear that that they essentially behaved like an occupier in this country. In this sense "Occupy Wall street" movement should actually be called "Liberation from Wall Street occupation" movement. ..."
"... Bill Clinton realized that he can betray working class with impunity as "they have nowhere to go" and will vote for Democrat anyway. In this sense Bill Clinton is a godfather of the right wing nationalism in the USA. He sowed the "Teeth's of Dragon" and now we have, what we have. ..."
Dec 26, 2016 | economistsview.typepad.comEMichael : December 26, 2016 at 12:47 PM , 2016 at 12:47 PMYou guys should wake up and smell what country you live in. Here is a good place to start.im1dc : , December 26, 2016 at 01:51 PM
"Campaigning for president in 1980, Ronald Reagan told stories of Cadillac-driving "welfare queens" and "strapping young bucks" buying T-bone steaks with food stamps. In trumpeting these tales of welfare run amok, Reagan never needed to mention race, because he was blowing a dog whistle: sending a message about racial minorities inaudible on one level, but clearly heard on another. In doing so, he tapped into a long political tradition that started with George Wallace and Richard Nixon, and is more relevant than ever in the age of the Tea Party and the first black president.
In Dog Whistle Politics, Ian Haney L?pez offers a sweeping account of how politicians and plutocrats deploy veiled racial appeals to persuade white voters to support policies that favor the extremely rich yet threaten their own interests. Dog whistle appeals generate middle-class enthusiasm for political candidates who promise to crack down on crime, curb undocumented immigration, and protect the heartland against Islamic infiltration, but ultimately vote to slash taxes for the rich, give corporations regulatory control over industry and financial markets, and aggressively curtail social services. White voters, convinced by powerful interests that minorities are their true enemies, fail to see the connection between the political agendas they support and the surging wealth inequality that takes an increasing toll on their lives. The tactic continues at full force, with the Republican Party using racial provocations to drum up enthusiasm for weakening unions and public pensions, defunding public schools, and opposing health care reform.
Rejecting any simple story of malevolent and obvious racism, Haney L?pez links as never before the two central themes that dominate American politics today: the decline of the middle class and the Republican Party's increasing reliance on white voters. Dog Whistle Politics will generate a lively and much-needed debate about how racial politics has destabilized the American middle class -- white and nonwhite members alike."
https://www.amazon.com/Dog-Whistle-Politics-Appeals-Reinvented-ebook/dp/B00GHJNSMUReading the above posts I am reminded that in November there was ONE Election with TWO Results:likbez : December 26, 2016 at 02:49 PM , 2016 at 02:49 PM
Electoral Vote for Donald Trump by the margin of 3 formerly Democratic Voting states Michigan, Ohio, and Pennsylvania
Popular Vote for Hillary Clinton by over 2.8 Million
The Democratic Party and its Candidates OBVIOUSLY need to get more votes in the Electoral States that they lost in 2016, not change what they stand for, the principles of fair and equal play for all.
And, in the 3 States that turned the Electoral Vote in Trump's favor and against Hillary, all that is needed are 125,000 or more votes, probably fewer, and the DEMS win the Electoral vote big too.
It is not any more complex than that.
So how does the Democratic Party get more votes in those States?
PANDER to their voters by delivering on KISS, not talking about it.
That is create living wage jobs and not taking them away as the Republican Party of 'Free Trade' and the Clinton Democratic Party 'Free Trade' Elites did.
Understand this: It is not the responsibility of the USA, or in its best interests, to create jobs in other nations (Mexico, Japan, China, Canada, Israel, etc.) that do not create jobs in the USA equivalently, especially if the gain is offset by costly overseas confrontations and involvements that would not otherwise exist.You are dreaming:
"The Democratic Party and its Candidates OBVIOUSLY need to get more votes in the Electoral States that they lost in 2016, not change what they stand for, the principles of fair and equal play for all. "
The Democratic Party as a Party (Sanders was an outlier) has nothing to do with "fair and equal play for all". This is a party of soft neoliberals and it adheres to Washington consensus no less then Republicans. https://en.wikipedia.org/wiki/Washington_Consensus
If you read the key postulates it is clear that that they essentially behaved like an occupier in this country. In this sense "Occupy Wall street" movement should actually be called "Liberation from Wall Street occupation" movement.
Bill Clinton realized that he can betray working class with impunity as "they have nowhere to go" and will vote for Democrat anyway. In this sense Bill Clinton is a godfather of the right wing nationalism in the USA. He sowed the "Teeth's of Dragon" and now we have, what we have.
[Dec 26, 2016] How could the US exist with no neoliberals and neocons pandering corporate war for Wall Street?
"... Do you think Trump will shutter those star wars bases in Poland and Rumania? ..."
Dec 26, 2016 | economistsview.typepad.comilsm -> A Boy Named Sue... , December 26, 2016 at 05:20 AMDreadful!
How could the US exist with no neoliberal, neocons pandering corporate war for wall st?
Do you think Trump will shutter those star wars bases in Poland and Rumania?
[Dec 26, 2016] The Quiet War on Medicaid - The New York Times
Dec 26, 2016 | www.nytimes.com--> The Quiet War on Medicaid
By GENE B. SPERLING DEC. 25, 2016Continue reading the main story Share This Page Continue reading the main story
Progressives have already homed in on Republican efforts to privatize Medicare as one of the major domestic political battles of 2017. If Donald J. Trump decides to gut the basic guarantee of Medicare and revamp its structure so that it hurts older and sicker people, Democrats must and will push back hard . But if Democrats focus too much of their attention on Medicare, they may inadvertently assist the quieter war on Medicaid - one that could deny health benefits to millions of children, seniors, working families and people with disabilities.
Of the two battles, the Republican effort to dismantle Medicaid is more certain. Neither Mr. Trump nor Senate Republicans may have the stomach to fully own the political risks of Medicare privatization. But not only have Speaker Paul D. Ryan and Tom Price, Mr. Trump's choice for secretary of health and human services, made proposals to deeply cut Medicaid through arbitrary block grants or "per capita caps," during the campaign, Mr. Trump has also proposed block grants.
If Mr. Trump chooses to oppose his party's Medicare proposals while pushing unprecedented cuts to older people and working families in other vital safety-net programs, it would play into what seems to be an emerging strategy of his: to publicly fight a few select or symbolic populist battles in order to mask an overall economic and fiscal strategy that showers benefits on the most well-off at the expense of tens of millions of Americans.
Without an intense focus by progressives on the widespread benefits of Medicaid and its efficiency, it will be too easy for Mr. Trump to market the false notion that Medicaid is a bloated, wasteful program and that such financing caps are means simply to give states more flexibility while "slowing growth." Medicaid's actual spending per beneficiary has, on average, grown about 3 percentage points less each year than it has for those with private health insurance, according to the Center on Budget and Policy Priorities - a long-term trend that is projected to continue. The arbitrary spending caps proposed by Mr. Price and Mr. Ryan would cut Medicaid to the bone, leaving no alternative for states but to impose harsh cuts in benefits and coverage.Continue reading the main story Advertisement Continue reading the main story
Mr. Price's own proposal, which he presented as the chairman of the House budget committee, would cut Medicaid by about $1 trillion over the next decade. This is on top of the reduction that would result from the repeal of the Affordable Care Act, which both Mr. Trump and Republican leaders have championed. Together, full repeal and block granting would cut Medicaid and the Children's Health Insurance Program funding by about $2.1 trillion over the next 10 years - a 40 percent cut.
Even without counting the repeal of the A.C.A. coverage expansion, the Price plan would cut remaining federal Medicaid spending by $169 billion - or one-third - by the 10th year of his proposal, with the reductions growing more severe thereafter. The Henry J. Kaiser Family Foundation estimated that a similar Medicaid block grant proposed by Mr. Ryan in 2012 would lead to 14 million to 21 million Americans' losing their Medicaid coverage by the 10th year, and that is on top of the 13 million who would lose Medicaid or children's insurance program coverage under an A.C.A. repeal.
The emerging Republican plan to "repeal, delay and replace" the A.C.A. seeks to further camouflage these harmful cuts. Current Republican plans to eliminate the marketplace subsidies and A.C.A. Medicaid expansion in 2019 would create a health care cliff where all of the Medicaid funds and subsidies for the A.C.A. expansion would simply disappear and 30 million people would lose their health care.Advertisement Continue reading the main story
In the face of such a manufactured crisis, the Trump administration could cynically claim to be increasing Medicaid funding by offering governors a small fraction of the existing A.C.A. expansion back as part of a block grant. No one should be deceived. Maintaining a small fraction of the current Medicaid expansion within a tightly constrained block grant is not an increase.
Some might whisper that these cuts would be harder to beat back because their impact would fall on those with the least political power. Sweeping cuts to Medicaid would hurt tens of millions of low-income and middle-income families who had a family member with a disability or were in need of nursing home care. About 60 percent of the costs of traditional Medicaid come from providing nursing home care and other types of care for the elderly and those with disabilities.
While Republicans resist characterizations of their block grant or cap proposals as tearing away health benefits from children, older people in nursing homes or middle-class families heroically coping with children with serious disabilities, the tyranny of the math does not allow for any other conclusion. If one tried to cut off all 30 million poor kids now enrolled in Medicaid, it would save 19 percent of the program's spending. Among the Medicaid programs at greatest risk would be those optional state programs that seek to help middle-income families who become "medically needy" because of the costs of having a child with a serious disability like autism or Down syndrome.
Democrats at all levels of government must aggressively communicate the degree to which these anodyne-sounding proposals would lead to an assault on health care for those in nursing homes and for working families straining to deal with a serious disability, as well as for the poorest Americans. With many Republican governors and local hospitals also likely to be victimized by the proposals of Mr. Ryan and Mr. Price, this fight can be both morally right and politically powerful . Republicans hold only a slight majority in the Senate. It would take only three Republican senators thinking twice about the wisdom of block grants and per capita caps to put a halt to the coming war on Medicaid.Gene B. Sperling was director of the National Economic Council from 1996 to 2001 and from 2011 until 2014.
[Dec 26, 2016] Wolf Richter: New Census Data Shows Why the Job Market is Still "Terrible" (as Trump said)
"... By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Wolf Street ..."
"... should head down ..."
"... not ..."
"... A population of less than 100 million in 1945 became more than 200 million in 1976 and over 320 million in 2016! Tripling your population in 70 years is a really bad idea. At this rate over a billion US citizens will exist in 2086. ..."
"... 'Merika is the third most populous nation in the world followed by Indonesia, Brazil, Pakistan and Nigeria. ..."
Dec 26, 2016 | www.nakedcapitalism.comPosted on December 26, 2016 by Lambert Strether Lambert here: I blame Putin.
By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Wolf Street
Hardly any improvement for individuals since the Great Recession.
When Donald Trump campaigned on how "terrible" the jobs situation was, while the Obama Administration touted the jobs growth since the employment bottom of the Great Recession in 2010, it sounded like they were talking about two entirely different economies at different ends of the world. But they weren't. Statistically speaking, they were both right.
Since 2011, the US economy created 14.6 million "nonfarm payrolls" as defined by the Bureau of Labor Statistics whether or not they're low-wage or less than full-time jobs. But for individuals, this job market, statistically speaking, looks almost as tough as it was during the Great Recession.
Obviously, a lot of people have found jobs, and some of them have found good jobs since then, and there are a ton of "job openings." But the Census Bureau just told us why the job market is still, to use Trump's term, "terrible" when it released its population estimates for 2016, just before clocking out for the holidays.
According to this report: From the beginning of 2010 in terms of jobs, the darkest days of the Great Recession through December 2016, the US "resident population" (not counting overseas-stationed military personnel) grew by 16 million people.
But since the beginning of 2010 through November 2016, nonfarm payrolls grew by only 13.8 million.
Note that in 2010, nonfarm payrolls declined by 900,000, after having plunged by over 5 million in 2009. The first year with growth in nonfarm payrolls was 2011.
The chart below shows this peculiar relationship between the "resident population" of the US (top green line) and nonfarm payrolls (bottom blue line). Both rose. But the bottom line (nonfarm payrolls) didn't rise nearly enough.
The difference between the two is the number of people that are not on nonfarm payrolls. They might be students, unemployed, retirees, or working in a job that the "nonfarm payrolls" do not capture (more on that in a moment). This is reflected by the red line, whose slope should head down in an economy where jobs grow faster than the population:
For the first five years of this seven-year period, the number of people not occupying a job as captured by nonfarm payroll data, kept growing (red numbers), even as the touted jobs growth was kicking in. Why? Because population growth outpaced jobs growth over the five years from 2010 through 2014.
Only in 2015 and 2016 has growth in "nonfarm payrolls" edged past population growth. Those were the only two years since the Great Recession when people on an individual basis actually had improving chances of getting a job.
The nonfarm payrolls data is not a complete measure of the US jobs situation. According to the Bureau of Labor Statistics , it excludes "proprietors, the unincorporated self-employed, unpaid volunteer or family employees, farm employees, and domestic employees. It also excludes military personnel, and employees of a big part of the intelligence community, including the CIA, the NSA, the National Imagery and Mapping Agency, and the Defense Intelligence Agency.
There are many folks who'd contend that this population growth is mostly young people who are not yet in the work force and old people who refuse to die, and that for working age people (say, 18 to 65), the jobs growth has been phenomenal.
But that's not the case. According to the Census report, in 2016, the percentage of people 18 and over grew to 249.5 million, making up 77.2% of the total US population, up from 76.8% in 2015 (247.3 million), and up from 76.2% in 2010! The millennials have moved into adulthood, elbowing each other while scrambling for jobs.
And boomers are not retiring from the working life. Why should they. Many of them are fit and don't want to sit around bored, and many of them have to work because they can't afford to quit working, even if they would like to. So the number of workers 65+ has soared 45% since the end of 2009, from 6.2 million to 9.0 million. So now there are nearly 3 million more of them on nonfarm payrolls than there had been in 2010:
The natural growth rate of the population (births minus deaths) has been declining for years. In 2016, it dropped to 0.38%, a new low. The growth rate from immigration, which fluctuates somewhat with the economy, edged down to 0.31%. So total population growth dropped to a new low of 0.69%. Of note: the natural growth rate via births won't impact the labor force until the babies are young adults. But the vast majority of new immigrants are of working age, and they add to the labor force immediately.
So the number of jobs since 2010 has risen by 13.8 million which the economists are endlessly touting, along with the even better sounding 14.8 million since 2011. But the population has increased by 16 million since 2010. Most of them are people of working age, jostling for position to grab one of these jobs that would put them on the nonfarm payrolls. And this is why the job market for many individuals is "terrible," as Trump said.
But those might have been the good times. Read Red Flag on Recession Crops up in NY Fed's Coincident Economic Index, first time since November 20090 0 0 0 1 1 This entry was posted in Dubious statistics , Guest Post , Politics , The destruction of the middle class on December 26, 2016 by Lambert Strether . About Lambert Strether
Lambert Strether has been blogging, managing online communities, and doing system administration 24/7 since 2003, in Drupal and WordPress. Besides political economy and the political scene, he blogs about rhetoric, software engineering, permaculture, history, literature, local politics, international travel, food, and fixing stuff around the house. The nom de plume "Lambert Strether" comes from Henry James's The Ambassadors: "Live all you can. It's a mistake not to." You can follow him on Twitter at @lambertstrether. http://www.correntewire.com KK , December 26, 2016 at 5:55 amArizona Slim , December 26, 2016 at 6:53 am
A population of less than 100 million in 1945 became more than 200 million in 1976 and over 320 million in 2016! Tripling your population in 70 years is a really bad idea. At this rate over a billion US citizens will exist in 2086. There are resource limits to growth. And a car, house, vacation, pension, healthcare,and large family will cease to be possible for all or even the majority. Study how the average Indian or Chinese family live and that albeit with a few bits of technology is the future.MtnLife , December 26, 2016 at 8:41 am
But the pro-natalists don't want to hear any discussion of overpopulation. Because of all those inconvenient facts.TG , December 26, 2016 at 9:54 am
A lot of "pro-natalists" are religious fundamentalists who do actually see the population/resource crunch coming for which they are trying to stack the numbers on their team.jefemt , December 26, 2016 at 10:26 am
But I think most of the "pro-natalists" are rich people who, more than anything else, want cheap labor. And there is no better way to get cheap labor than to force population growth ever higher.
We are not importing foreign workers because the natives refuse to breed 'enough' children. The natives (of all races) are limiting their family sizes because they are worried about having more children than they can support, just like they did in the great depression. Left to themselves, that would start to tighten up the labor market and produce powerful forces raising wages. But not if we keep forcing ever more foreign workers into the labor pool. Which is of course the whole idea.
Cheap labor uber alles!Ed , December 26, 2016 at 11:10 am
'Merika is the third most populous nation in the world followed by Indonesia, Brazil, Pakistan and Nigeria. Seems to be a mind-jarring fat to most when I bring it up .sd , December 26, 2016 at 6:29 am
Alot of poorer countries in the "developing world" ensured they stayed poorer by letting their population growth get out of control. A big, if not the main, reason for China's economic success since 1975 was in getting its population growth under control, that is a big reason for the contrast between China and India.
Unlike, for example, Japan, the rulers of the United States decided to emulate the developing countries that let their populations expand too much, importing people from the developing world to get the job done.Larry , December 26, 2016 at 7:35 am
Interesting about excluding domestic employees when it would appear there's been a huge surge in nannies as well as home aides since the 1990s.McWatt , December 26, 2016 at 8:44 am
Very true, though most of these positions are by definition crappy jobs.diptherio , December 26, 2016 at 10:02 am
The key to saving the planet is dealing with population growth.George Phillies , December 26, 2016 at 8:46 am
The planet can take care of itself. I think you mean "the key to saving ourselves." Also I think consumption patterns of the "global North" are more of a problem than simply population.Jack , December 26, 2016 at 9:10 am
That resident population number appears to include under-16-year-olds who are in most cases not looking for employment. I have no idea how that number has changed. Ditto, it includes the voluntarily retired.diptherio , December 26, 2016 at 10:13 am
This article appears to be another argument for immigration. I am very much a progressive liberal, excepting the standard progressive immigration stance that more is better and that illegal immigration is o.k.
What would our job market look like without immigrants, even just legal immigrants?
Between 1970 and 2014, the percentage of foreign-born workers in the civilian labor force more than tripled, from 5 percent to 17 percent. In 2014 immigrants accounted for 17% of the work force; 27.6 million out of 159.5 million. What is that number was cut in half?
The number of US unemployed peaked in 2009 at 15,352,000. Today its 7,400,000 (if you believe the official numbers).
That means if we had cut immigration by just 30% there would be 0 unemployment. Of course this is a simplistic analysis but it is interesting to compare the two. And of course with near 0 unemployment wages would be pushed up.
No wonder the powers that be keep yammering about immigration but never do anything about it. More people in the country willing to work for less money means increased profits for the rich.Pat , December 26, 2016 at 10:30 am
Did you not read the article or simply fail to grasp it? Richter points out that the population has grown faster than the number of jobs and also that immigration is the largest part of that pop. growth (especially the adult population). He nowhere makes an argument for more illegal (or legal) immigration.
On immigration, how about we ask ourselves why it is that so many people are immigrating here and what we might do to discourage them? For instance, a kind of Marshall Plan for Central and South America would probably go a long way, as most people prefer to stay where they are from, if they can make a reasonable life there.Art Eclectic , December 26, 2016 at 10:46 am
Call me crazy, but considering that the Clinton campaign had access to a certain portion of this information, their inability to understand the appeal of Sanders and Trump is clearly delusional.
Certainly the latest data just came out, but some of this about the period until 2014 and even a little after had to be out there. They had to know that until recently there really were not enough jobs to go around, and that there was a good chance that any gains in the last year or so were not enough to remotely cover the deficit up to that point. I get they might not have had the information that beyond not being enough most of the jobs created were part time and benefit free. That doesn't explain not seeing and getting that most Americans have seen little or no recovery.
It appears the DLC Democratic Party must be similar to that narrative driven NY Times environment, you only survive if you embrace the narrative even as the success of the enterprise you are apart loses more and more.cocomaan , December 26, 2016 at 10:58 am
"It is difficult to get a man to understand something, when his salary depends on his not understanding it."
― Upton Sinclair
All career elected politicians on both sides of the aisle are paid to not understand the jobs problem by donors with very large wallets who do not want the jobs problem solved. Follow the money. Who wants cheap labor and what's the best way to get it if you can't offshore operations?
We cannot rebuild the DLC or any leftist party until we figure out how to fund campaigns without donor money that is interested in maintaining the status quo.Ed , December 26, 2016 at 11:16 am
You can use data points ("14 million jobs created!!!!") to push whatever narrative you want.
Data driven decision making really is just excuse making by outsourcing your choices to endless computer-created pages of data.Enquiring Mind , December 26, 2016 at 11:13 am
I will comment elsewhere, but I keep on hearing arguments on the lines that if only Hillary Clinton had understood the problems of the white working class she would have won or something along these lines.
The Trump and Sanders campaigns were protest vehicles -- and there were precursors in previous elections -- over how the country has been run for the past several decades. Since 1981 either the Clintons or the Bushes have either lived in the White House or held really high ranking positions in the US government.
Members of neither family can credibly run against globalization (or "invade the world/ invite the world" as Steve Sailer puts it) or really other major policies pursued by the US government since the 1980s. They own it.
They have to run on a globalization platform. Hillary Clinton in fact did surprisingly well at the polls, considering this.
There can be types of verbal Marshall Plans, too. Some percentage of the US transient population has self-deported already, although likely not enough to upset the temporary Obama Rush of 1,500+ per day streaming in to claim amnesty prior to January 20th. Announce that undocumented entrants will be turned back, instead of throwing benefits at them, and that will help stem the human tide.
Supplement that with specific policies to aid and abet Mexico and Central American governments in their internal and border control efforts to stop the human tide further south. Publicize those efforts and stick to them.
Both policies would change the dynamic and would allow some degree of US control over its own population growth. Then put in place specific, actionable steps to identify and facilitate thoughtful population growth to meet US needs and to allow for legitimate humanitarian relief instead of bleeding heart efforts that externalized ill-considered policies.
[Dec 26, 2016] IBM Promises To Hire 25,000 Americans As Tech Executives Set To Meet Trump
Dec 26, 2016 | politics.slashdot.org(reuters.com) 241 Posted by BeauHD on Tuesday December 13, 2016 @10:30PM from the lick-and-a-promise dept. IBM Chief Executive Ginni Rometty has pledged to "hire about 25,000 professionals in the next four years in the United States " as she and other technology executives prepared to meet with President-elect Donald Trump on Wednesday. Reuters reports: IBM had nearly 378,000 employees at the end of 2015, according to the company's annual report. While the firm does not break out staff numbers by country, a review of government filings suggests IBM's U.S. workforce declined in each of the five years through 2015. When asked why IBM planned to increase its U.S. workforce after those job cuts, company spokesman Ian Colley said in an email that Rometty had laid out the reasons in her USA Today piece. Her article did not acknowledge that IBM had cut its U.S. workforce, although it called on Congress to quickly update the Perkins Career and Technical Education Act that governs federal support for vocational education. "We are hiring because the nature of work is evolving," she said. "As industries from manufacturing to agriculture are reshaped by data science and cloud computing, jobs are being created that demand new skills -- which in turn requires new approaches to education, training and recruiting." She said IBM intended to invest $1 billion in the training and development of U.S. employees over the next four years. Pratt declined to say if that represented an increase over spending in the prior four years.
[Dec 26, 2016] Economist's View Charles Dickens on Seeing the Poor
Dec 26, 2016 | economistsview.typepad.com
Economists might also wince just a bit... Dickens writes: "I know that the unreasonable disciples of a reasonable school, demented disciples who push arithmetic and political economy beyond all bounds of sense (not to speak of such a weakness as humanity), and hold them to be all-sufficient for every case, can easily prove that such things ought to be, and that no man has any business to mind them. Without disparaging those indispensable sciences in their sanity, I utterly renounce and abominate them in their insanity ..." Here's Dickens:
... ... ...ilsm : , December 25, 2016 at 10:51 AMThings ($) before people. Wrong!likbez : , -1Economists might also wince just a bit... Dickens writes: "I know that the unreasonable disciples of a reasonable school, demented disciples who push arithmetic and political economy beyond all bounds of sense (not to speak of such a weakness as humanity), and hold them to be all-sufficient for every case, can easily prove that such things ought to be, and that no man has any business to mind them. Without disparaging those indispensable sciences in their sanity, I utterly renounce and abominate them in their insanity ..."
This is not about insanity, this is about greed.
Reading this I am thinking that Hyman Minsky was a scientist, while Milton Friedman especially just before and after "Capitalism and Freedom" was a well-paid intellectual prostitute of financial oligarchy.
[Dec 25, 2016] Why Central Bank Models Failed and How to Repair Them
"... Popular pre-financial crisis versions of the model excluded banking and finance, taking as given that finance and asset prices were merely a by-product of the real economy. ..."
"... The centre-piece of Paul Romer's scathing attack on these models is on the 'pretence of knowledge' ..."
"... he is critical of the incredible identifying assumptions and 'pretence of knowledge' in both Bayesian estimation and the calibration of parameters in DSGE models. ..."
"... A further symptom of the 'pretence of knowledge' is the assumed 'knowledge' that these parameters are constant over time. A milder critique by Olivier Blanchard (2016) points to a number of failings of DSGE models and recommends greater openness to more eclectic approaches. ..."
"... The equation is based on the assumption of inter-temporal optimising by consumers and that every consumer faces the same linear period-to-period budget constraint, linking income, wealth, and consumption. ..."
"... In the basic form, consumption every period equals permanent non-property income plus permanent property income defined as the real interest rate times the stock of wealth held by consumers at the beginning of each period. Permanent non-property income converts the variable flow of labour and transfer incomes a consumer expects over a lifetime into an amount equally distributed over time. ..."
"... However, consumers actually face idiosyncratic (household-specific) and uninsurable income uncertainty, and uncertainty interacts with credit or liquidity constraints. ..."
"... The 2000 Commodity Futures Modernization Act (CFMA) made derivatives enforceable throughout the US with priority ahead of claims by others (e.g. workers) in bankruptcy. ..."
"... 2004 SEC decision to ease capital requirements on investment banks increased gearing to what turned out to be dangerous levels ..."
"... Similar measures to lower required capital on investment grade PMBS increased leverage at commercial banks. These changes occurred in the political context of pressure to extend credit to poor. ..."
"... The importance of debt was highlighted in the debt-deflation theory of the Great Depression of Fisher (1933). 5 Briefly summarised, his story is that when credit availability expands, it raises spending, debt, and asset prices; irrational exuberance raises prices to vulnerable levels, given leverage; negative shocks can then cause falls in asset prices, increased bad debt, a credit crunch, and a rise in unemployment. ..."
"... In the financial accelerator feedback loops that operated in the US sub-prime crisis, falls in house prices increased bad loans and impaired the ability of banks to extend credit. As a result, household spending and residential investment fell, increasing unemployment and reducing incomes, feeding back further into lower asset prices and credit supply. ..."
"... The transmission mechanism that operated via consumption was poorly represented by the Federal Reserve's FRB-US model and similar models elsewhere. ..."
"... Reminds me of a young poseur at engineering school, who exclaimed during a group study session, "I've got it all jocked out. Now I just need the equations!" ..."
"... I have been aware of that for a few years now, but I doubt that one person in a hundred (or a thousand) knows when they listen to some economist on a news program or a business channel that the person speaking thinks that how much debt people have does not substantively affect their spending. ..."
"... If I used or invented an econ model that left out the "consumer", and modeled it with a "consumption agent object" having a single independent input variable being the Fed zero term, zero risk interest rate, I'd be too embarrassed to admit it. I would probably just very quietly make a career change into one of the softer sciences. Maybe writing fictional romance novels, or some such thing. ..."
"... The worst thing about these types of mea culpas from the mainstream is the cited criticisms from other mainstream economists only. It can only be a valid criticism if it was published in a mainstream journal ..."
"... That 'political pressure' turned out to be the bait and switch for a system that shifted power via debt creation. ..."
"... What we have not yet come to terms with are the implications of David Graeber's anthropological insights: how does debt affect social relationships, alter social norms, and affect relationships among individuals? ..."
"... Debt is a form of power, but by failing to factor this into their equations, the Central Bankers are missing the social, political, and cultural consequences of the profound shifts in 'credit market architecture'. In many respects, this is not about 'money'; it's about power. ..."
"... The Central Bankers' models can include all the parameters they can dream up, but until someone starts thinking more clearly about the role and function of money, and the way that 'different kinds of money' create 'different kinds of social relationships', we are all in a world of hurt. ..."
"... Now, maybe it is just a coincidence, but it is hard for me not to notice that the explosion in consumer credit matches up nicely with the rise in inequality. ..."
"... " .. debt does not make society as a whole poorer: one person's debt is another person's asset. So total wealth is unaffected by the amount of debt out there. This is, strictly speaking true only for the world economy as a whole .. " Paul Krugman "End this Depression Now". ..."
Dec 25, 2016 | www.nakedcapitalism.comBy John Muellbauer, Professor of Economics, Oxford University. Originally published at VoxEU
The failure of the New Keynesian dynamic stochastic general equilibrium models to capture interactions of finance and the real economy has been widely recognised since the Global Crisis. This column argues that the flaws in these models stem from unrealistic micro-foundations for household behaviour and from wrongly assuming that aggregate behaviour mimics a fully informed 'representative agent'. Rather than 'one-size-fits-all' monetary and macroprudential policy, institutional differences between countries imply major differences for monetary policy transmission and policy.
The New Keynesian DSGE models that dominated the macroeconomic profession and central bank thinking for the last two decades were based on several principles.
- The first was formal derivation from micro-foundations, assuming optimising behaviour of consumers and firms with rational or 'model-consistent' expectations of future conditions. For such derivation to result in a tractable model, it was assumed that the behaviour of firms and of consumers corresponded to that of a 'representative' firm and a 'representative' consumer. In turn, this entailed the absence of necessarily heterogeneous credit or liquidity constraints. Another important assumption to obtain tractable solutions was that of a stable long-run equilibrium trend path for the economy. If the economy was never far from such a path, the role of uncertainty would necessarily be limited. Popular pre-financial crisis versions of the model excluded banking and finance, taking as given that finance and asset prices were merely a by-product of the real economy.
- Second, a competitive economy was assumed but with a number of distortions, including nominal rigidities sluggish price adjustment and monopolistic competition. This is what distinguished New Keynesian DSGE models from the general equilibrium real business cycle (RBC) models that preceded them. It extended the range of stochastic shocks that could disturb the economy from the productivity or taste shocks of the RBC model. Finally, while some models calibrated (assumed) values of the parameters, where the parameters were estimated, Bayesian system-wide estimation was used, imposing substantial amounts of prior constraints on parameter values deemed 'reasonable'.
The 'Pretence of Knowledge'
The centre-piece of Paul Romer's scathing attack on these models is on the 'pretence of knowledge' (Romer 2016); echoing Caballero (2010), he is critical of the incredible identifying assumptions and 'pretence of knowledge' in both Bayesian estimation and the calibration of parameters in DSGE models. 1
A further symptom of the 'pretence of knowledge' is the assumed 'knowledge' that these parameters are constant over time. A milder critique by Olivier Blanchard (2016) points to a number of failings of DSGE models and recommends greater openness to more eclectic approaches.
As explained in Muellbauer (2016), an even deeper problem, not seriously addressed by Romer or Blanchard, lies in the unrealistic micro-foundations for the behaviour of households embodied in the 'rational expectations permanent income' model of consumption, an integral component of these DSGE models. Consumption is fundamental to macroeconomics both in DSGE models and in the consumption functions of general equilibrium macro-econometric models such as the Federal Reserve's FRB-US. At the core of representative agent DSGE models is the Euler equation for consumption, popularised in the highly influential paper by Hall (1978). It connects the present with the future, and is essential to the iterative forward solutions of these models. The equation is based on the assumption of inter-temporal optimising by consumers and that every consumer faces the same linear period-to-period budget constraint, linking income, wealth, and consumption. Maximising expected life-time utility subject to the constraint results in the optimality condition that links expected marginal utility in the different periods. Under approximate 'certainty equivalence', this translates into a simple relationship between consumption at time t and planned consumption at t +1 and in periods further into the future.
Under these simplifying assumptions, the rational expectations permanent income consumption function can be derived. In the basic form, consumption every period equals permanent non-property income plus permanent property income defined as the real interest rate times the stock of wealth held by consumers at the beginning of each period. Permanent non-property income converts the variable flow of labour and transfer incomes a consumer expects over a lifetime into an amount equally distributed over time.
However, consumers actually face idiosyncratic (household-specific) and uninsurable income uncertainty, and uncertainty interacts with credit or liquidity constraints. The asymmetric information revolution in economics in the 1970s for which Akerlof, Spence and Stiglitz shared the Nobel prize explains this economic environment. Research by Deaton (1991,1992), 2 several papers by Carroll (1992, 2000, 2001, 2014), Ayigari (1994), and a new generation of heterogeneous agent models (e.g. Kaplan et al. 2016) imply that household horizons then tend to be both heterogeneous and shorter with 'hand-to-mouth' behaviour even by quite wealthy households, contradicting the textbook permanent income model, and hence DSGE models. A second reason for the failure of these DSGE models is that aggregate behaviour does not follow that of a 'representative agent'. Kaplan et al. (2016) show that, with these better micro-foundations, quite different implications follow for monetary policy than in the New Keynesian DSGE models. A third reason is that structural breaks, as shown by Hendry and Mizon (2014), and radical uncertainty further invalidate DSGE models, illustrated by the failure of the Bank of England's DSGE model both during and after the 2008-9 crisis (Fawcett et al. 2015). The failure of the representative agent Euler equation to fit aggregate data 3 is further empirical evidence against the assumptions underlying the DSGE models, while evidence on financial illiteracy (Lusardi 2016) is a problem for the assumption that all consumers optimise.
The Evolving Credit Market Architecture
Of the structural changes, the evolution and revolution of credit market architecture was the single most important. In the US, credit card ownership and instalment credit spread between the 1960s and the 2000s; the government-sponsored enterprises Fannie Mae and Freddie Mac were recast in the 1970s to underwrite mortgages; interest rate ceilings were lifted in the early 1980s; and falling IT costs transformed payment and credit screening systems in the 1980s and 1990s. More revolutionary was the expansion of sub-prime mortgages in the 2000s, driven by rise of private label securitisation backed by credit default obligations (CDOs) and swaps.
The 2000 Commodity Futures Modernization Act (CFMA) made derivatives enforceable throughout the US with priority ahead of claims by others (e.g. workers) in bankruptcy. This permitted derivative enhancements for private label mortgage-backed securities (PMBS) so that they could be sold on as highly rated investment grade securities. A second regulatory change was the deregulation of banks and investment banks. In particular, the 2004 SEC decision to ease capital requirements on investment banks increased gearing to what turned out to be dangerous levels and further boosted PMBS, Duca et al (2016). Similar measures to lower required capital on investment grade PMBS increased leverage at commercial banks. These changes occurred in the political context of pressure to extend credit to poor.
The Importance of Debt
A fourth reason for the failure of the New Keynesian DSGE models, linking closely with the previous, is the omission of debt and household balance sheets more generally, which are crucial for understanding consumption and macroeconomic fluctuations. Some central banks did not abandon their large non-DSGE econometric policy models, but these were also defective in that they too relied on the representative agent permanent income hypothesis which ignored shifts in credit constraints and mistakenly lumped all elements of household balance sheets, debt, liquid assets, illiquid financial assets (including pension assets) and housing wealth into a single net worth measure of wealth. 4 Because housing is a consumption good as well as an asset, consumption responds differently to a rise in housing wealth than to an increase in financial wealth (see Aron et al. 2012). Second, different assets have different degrees of 'spendability'. It is indisputable that cash is more spendable than pension or stock market wealth, the latter being subject to asset price uncertainty and access restrictions or trading costs. This suggests estimating separate marginal propensities to spend out of liquid and illiquid financial assets. Third, the marginal effect of debt on spending is unlikely just to be minus that of either illiquid financial or housing wealth. The reason is that debt is not subject to price uncertainty and it has long-term servicing and default risk implications, with typically highly adverse consequences.
The importance of debt was highlighted in the debt-deflation theory of the Great Depression of Fisher (1933). 5 Briefly summarised, his story is that when credit availability expands, it raises spending, debt, and asset prices; irrational exuberance raises prices to vulnerable levels, given leverage; negative shocks can then cause falls in asset prices, increased bad debt, a credit crunch, and a rise in unemployment.
In the 1980s and early 1990s, boom-busts in Norway, Finland, Sweden, and the UK followed this pattern. In the financial accelerator feedback loops that operated in the US sub-prime crisis, falls in house prices increased bad loans and impaired the ability of banks to extend credit. As a result, household spending and residential investment fell, increasing unemployment and reducing incomes, feeding back further into lower asset prices and credit supply.
The transmission mechanism that operated via consumption was poorly represented by the Federal Reserve's FRB-US model and similar models elsewhere. A more relevant consumption function for modelling the financial accelerator is needed, modifying the permanent income model with shorter time horizons, 6 incorporating important shifts in credit lending conditions, and disaggregating household balance sheets into liquid and illiquid elements, debt and housing wealth.
Implications for Macroeconomic Policy Models
To take into account all the feedbacks, a macroeconomic policy model needs to explain asset prices and the main components of household balance sheets, including debt and liquid assets. This is best done in a system of equations including consumption, in which shifts in credit conditions which have system-wide consequences, sometimes interacting with other variables such as housing wealth are extracted as a latent variable. 7 The availability of home equity loans, which varies over time and between countries hardly available in the US of the 1970s or in contemporary Germany, France or Japan and the also the variable size of down-payments needed to obtain a mortgage, determine whether increases in house prices increase (US and UK) or reduce (Germany and Japan) aggregate consumer spending. This is one of the findings of research I review in Muellbauer (2016). Another important finding is that a rise in interest rates has different effects on aggregate consumer spending depending on the nature of household balance sheets. Japan and Germany differ radically from the US and the UK, with far higher bank and saving deposits and lower household debt levels so that lower interest rates reduce consumer spending. A crucial implication of these two findings is that monetary policy transmission via the household sector differs radically between countries it is far more effective in the US and UK, and even counterproductive in Japan (see Muellbauer and Murata 2011).
Such models, building in disaggregated balance sheets and the shifting, interactive role of credit conditions, have many benefits: better interpretations of data on credit growth and asset prices helpful for developing early warning indicators of financial crises; better understandings of long-run trends in saving rates and asset prices; and insights into transmission for monetary and macro-prudential policy. Approximate consistency with good theory following the information economics revolution of the 1970s is better than the exact consistency of the New Keynesian DSGE model with bad theory that makes incredible assumptions about agents' behaviour and the economy. Repairing central bank policy models to make them more relevant and more consistent with the qualitative conclusions of the better micro-foundations outlined above is now an urgent task.
 Part of the problem of identification is that the DSGE models throw away long-run information. They do this by removing long-run trends with the Hodrick-Prescott filter, or linear time trends specific to each variable. Identification, which rests on available information, then becomes more difficult, and necessitates 'incredible assumptions'. Often, impulse response functions tracing out the dynamic response of the modelled economy to shocks are highly sensitive to the way the data have been pre-filtered.
 This important research was highly praised in Angus Deaton's 2015 Nobel prize citation: http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2015/advanced.html
 See Campbell and Mankiw (1989, 1990) and for even more powerful evidence from the UK, US and Japan; Muellbauer (2010); and micro-evidence from Shea (1995).
 Net worth is defined as liquid assets minus mortgage and non-mortgage debt plus illiquid financial assets plus housing assets, and this assumes that the coefficients are all the same.
 In recent years, several empirical contributions have recognised the importance of the mechanisms described by Fisher (1933). Mian and Sufi (2014) have provided extensive micro-economic evidence for the role of credit shifts in the US sub-prime crisis and the constraining effect of high household debt levels. Focusing on macro-data, Turner (2015) has analysed the role of debt internationally with more general mechanisms, as well as in explaining the poor recovery from the global financial crisis. Jorda et al. (2016) have drawn attention to the increasing role of real estate collateral in bank lending in most advanced countries and in financial crises.
 The FRB-US model does build in shorter average horizons than text-book permanent income. It also has a commendable flexible treatment of expectations, Brayton et al (1997).
 The use of latent variables in macroeconomic modelling has a long vintage. Potential output, and the "natural rate" of unemployment or of interest are often treated as latent variables, for example in the FRB-US model and in Laubach and Williams (2003), and latent variables are often modelled using state space methods. Flexible spline functions can achieve similar estimates. Interaction effects of latent with other variables seem not to have been considered, however. We use the term 'latent interactive variable equation system' (LIVES) to describe the resulting format.Jim Haygood , December 24, 2016 at 9:08 amfresno dan , December 24, 2016 at 12:37 pm
'the omission of debt and household balance sheets more generally'
putting these eclownometric [sic] models at about the same level of technical sophistication as the Newcomen steam engine of 1712, which achieved about one (1) percent thermodynamic efficiency.
'a macroeconomic policy model needs to explain asset prices and household balance sheets. This is best done in a system of equations.'
Yes indeedy. Reminds me of a young poseur at engineering school, who exclaimed during a group study session, "I've got it all jocked out. Now I just need the equations!"craazyboy , December 24, 2016 at 2:04 pm
December 24, 2016 at 9:08 am
' the omission of debt and household balance sheets more generally '
You beat me to it. I have been aware of that for a few years now, but I doubt that one person in a hundred (or a thousand) knows when they listen to some economist on a news program or a business channel that the person speaking thinks that how much debt people have does not substantively affect their spending.
Really, 5 year olds describing how they get toys from Santa have a better grasp of economics than most "economists"TiPs , December 24, 2016 at 9:41 am
If I used or invented an econ model that left out the "consumer", and modeled it with a "consumption agent object" having a single independent input variable being the Fed zero term, zero risk interest rate, I'd be too embarrassed to admit it. I would probably just very quietly make a career change into one of the softer sciences. Maybe writing fictional romance novels, or some such thing.readerOfTeaLeaves , December 24, 2016 at 11:14 am
The worst thing about these types of mea culpas from the mainstream is the cited criticisms from other mainstream economists only. It can only be a valid criticism if it was published in a mainstream journaljsn , December 24, 2016 at 11:45 am
Of the structural changes, the evolution and revolution of credit market architecture was the single most important . In the US, credit card ownership and instalment credit spread between the 1960s and the 2000s; the government-sponsored enterprises Fannie Mae and Freddie Mac were recast in the 1970s to underwrite mortgages; interest rate ceilings were lifted in the early 1980s; and falling IT costs transformed payment and credit screening systems in the 1980s and 1990s. More revolutionary was the expansion of sub-prime mortgages in the 2000s, driven by rise of private label securitisation backed by credit default obligations (CDOs) and swaps. The 2000 Commodity Futures Modernization Act (CFMA) made derivatives enforceable throughout the US with priority ahead of claims by others (e.g. workers) in bankruptcy. This permitted derivative enhancements for private label mortgage-backed securities (PMBS) so that they could be sold on as highly rated investment grade securities. A second regulatory change was the deregulation of banks and investment banks . Similar measures to lower required capital on investment grade PMBS increased leverage at commercial banks. These changes occurred in the political context of pressure to extend credit to poor.
That 'political pressure' turned out to be the bait and switch for a system that shifted power via debt creation.
What we have not yet come to terms with are the implications of David Graeber's anthropological insights: how does debt affect social relationships, alter social norms, and affect relationships among individuals?
Debt is a form of power, but by failing to factor this into their equations, the Central Bankers are missing the social, political, and cultural consequences of the profound shifts in 'credit market architecture'. In many respects, this is not about 'money'; it's about power.
After Brexit, Trump, and the emerging upheaval in the EU, it's no longer enough to just 'build better economic models'.
The Central Bankers' models can include all the parameters they can dream up, but until someone starts thinking more clearly about the role and function of money, and the way that 'different kinds of money' create 'different kinds of social relationships', we are all in a world of hurt.
At this point, Central Bankers should also ask themselves what happens - socially, personally - when 'debt' (i.e., financialization) shifts from productivity to predation. That shift accelerated from the 1970s, through the 1990s, into the 2000s.
Allowing anyone to charge interest that is usurious is the modern equivalent of turning a blind eye to slavery.
By enabling outrageous interest, any government hands their hard working taxpayers over to what is essentially unending servitude.
This destroys the political power of any government that engages in such blind stupidity.
Frankly, I'm astonished that it has taken so long for taxpayers to show signs of outrage and revolt.fresno dan , December 24, 2016 at 12:51 pm
Voters in the U.S. react under radical new action retarding constraints:
- IT enhanced agnatology: kick ass propaganda
- Suburbanization: deportation of the working class from the collective action friendly urban geographycraazyboy , December 24, 2016 at 2:23 pm
December 24, 2016 at 11:14 am
I think you have come up with a good insight I very much agree its about power and not money.
Now, maybe it is just a coincidence, but it is hard for me not to notice that the explosion in consumer credit matches up nicely with the rise in inequality.
And one other thing I would point out it doesn't take usurious interest rates. If squillionaires have access to unlimited, essentially cost free money in which the distributors of money are guaranteed a profit, NO MATTER HOW MUCH THEY HAVE LOST, while the debts on non-squillionaires are collected with fees, penalties, and to the last dime, than it doesn't matter if interest rates are essentially zero.
Who gets bailed out is not due to logic or accounting that says that the banks' losses have to be made whole, but not home owners that is an ideology called economics .Josι , December 24, 2016 at 12:19 pm
I wouldn't downplay how cool the money part is, however. It's no fun making questionable, dodgy loans unless you can charge fees up front and then sell the risk off to a large crowd of suckers. Hence the importance of securitization and other "insurance" type derivatives. Then, if you run out of willing suckers, you need a place to stuff it all, say pension plans and maybe even privatized social security.
But if they allow this to happen in the real world, shouldn't the models have a piece reflecting this behavior as well? Full circle of course, where the "consumer balance sheet" contains his bad debt investment and savings assets* offsetting his liabilities. Then everyone would be more like a bank?
* we still need to model bubble assets like real estate and stocks. This sounds like it's starting to get tricky!craazyboy , December 24, 2016 at 2:50 pm
"Another important finding is that a rise in interest rates has different effects on aggregate consumer spending depending on the nature of household balance sheets".
This is a point that Warren Mosler and other MMTers have been making since the 1990s: depending on circumstances, lower interest rates may well have contractionary effects and higher interest rates may stimulate the economy.
The tool of choice to fight recessions and control inflation should thus be fiscal instead of monetary policy.
Again, MMT had the analysis right long before mainstream theory started to admit there might be serious problems with its favorite approaches (without ever giving appropriate credit to MMT, of course!).
Very sad!susan the other , December 24, 2016 at 12:25 pm
I think the Samarians knew that 5000 years ago. The Templars certainly knew it 1300 years ago. And most definitely, "modern" European banking knew it 300 years ago.OpenThePodBayDoorsHAL , December 24, 2016 at 2:10 pm
of note to me is just how simplistic Keynesian statistics were/are, based on almost fantasy-assumptions. And that was followed by Stiglitz et al's theory of asymmetric information models. And this above does give us a dose of all the different variables involved in accurately analyzing an economy an economy that exploded with financialization, but nobody could keep up. As was proven in 2008. It shouldn't be this confusing. "Repairing CB policies to make them more relevant is now an urgent task." I think it is urgent enough to nationalize the banks and start over using a sovereign money model.Plenue , December 24, 2016 at 5:32 pm
Let's take an infinitely complex system (the economy) that is widely affected by human emotion, then we'll leave out the mechanism by which money itself is created and distributed and then let's "model" it.
We'll have two fans of Stalin's communist "command and control" economy (Keynes and Harry Dexter White) pretend they could create a stable system based on Ph.Ds divining future economic and trade flows and then "managing" them by price fixing the price of money. We'll set policy based on the national conditions of the country with the global reserve currency despite the fact that 2/3 of that currency is outside that country. And with a system where trade never settles so massive imbalances can persist indefinitely. Then let's put self-interested private institutions in charge of all money creation and distribution .and we'll be sure their system operates in secret and is never audited. When the system blows up we'll have these central overlords step in as uneconomic buyers of assets with no consideration for asset quality or price, with no economic need to ever sell, and with "unlimited" funds with which to buy more such assets. At the end we'll continue to call the system "capitalism" and we'll continue to call the scrip "money" and hope nobody notices.
End the Fed.Sound of the Suburbs , December 24, 2016 at 2:21 pm
Congress creates the money when it passes budget legislation. The Fed merely enacts their decree.Sound of the Suburbs , December 24, 2016 at 2:23 pm
Economics has long been known as the dismal science.
The IMF forecast Greek GDP would have recovered by 2015 with austerity.
By 2015 it was down 27% and still falling.
The IMF can attract some of the best economists in the world but a technocrat elite trained in a dismal science aren't up to much.
In 2008 the Queen visited the revered economists of the LSE and said "If these things were so large, how come everyone missed it?"
The FED is full of PhDs from America's finest universities but a technocrat elite trained in a dismal science aren't up to much.
The FED will have been looking at the US money supply, let me show you what they missed:
Everything is reflected in the money supply.
The money supply is flat in the recession of the early 1990s.
Then it really starts to take off as the dot.com boom gets going which rapidly morphs into the US housing boom, courtesy of Alan Greenspan's loose monetary policy.
When M3 gets closer to the vertical, the black swan is coming and you have a credit bubble on your hands (money = debt).
The mainstream are all trained in neoclassical economics which is spectacularly dismal.
Steve Keen sits outside the mainstream and saw the credit bubble forming in 2005, you can see it in the
US money supply (money = debt).
In 2007, Ben Bernanke could see no problems ahead (dismal).
Irving Fisher looked at the debt inflated asset bubble after the 1929 crash when ideas that markets reached stable equilibriums were beyond a joke.
Fisher developed a theory of economic crises called debt-deflation, which attributed the crises to the bursting of a credit bubble.
Hyman Minsky came up with "financial instability hypothesis" in 1974 and Steve Keen carries on with this work today. The theory is there outside the mainstream.
To understand the theory you have to understand money:
" .. debt does not make society as a whole poorer: one person's debt is another person's asset. So total wealth is unaffected by the amount of debt out there. This is, strictly speaking true only for the world economy as a whole .. " Paul Krugman "End this Depression Now".
This is the neoclassical economic view of money and it's totally wrong and will always leave you blind to events like 2008, e.g.
1929 US (margin lending into US stocks)
1989 Japan (real estate)
2008 US (real estate bubble leveraged up with derivatives for global contagion)
2010 Ireland (real estate)
2012 Spain (real estate)
2015 China (margin lending into Chinese stocks)
Norway, Sweden, Canada and Australia have been letting their real estate bubbles inflate because their mainstream economists and Central Bankers don't know what's coming.
Money and debt are opposite sides of the same coin.
If there is no debt there is no money.
Money is created by loans and destroyed by repayments of those loans.
If you want to understand how money really works:
From the BoE:
"Where does money come from" available from Amazon
You need to understand how money works to understand why austerity doesn't work in balance sheet recessions, the cause of the dire prediction from the IMF that I started with.
You can look at the money supply/debt levels (the same thing) to see how well the economy is doing.
The money supply is contracting the economy will be doing badly and the risk of this turning into debt deflation is high, there is positive feedback tending to make the situation worse. Debt repayments are larger than the new debt being taken out, the overall level of debt is decreasing.
The money supply is stable this is stagnation, in the ideal world the money supply should be growing at a steady pace.
The money supply is growing steadily the ideal.
The money supply is growing very rapidly you've got a credit bubble on your hands and the "black swan" is near. The FED didn't understand money and debt before 2008 so they missed it.
Richard Koo explains:
Mario is still doing austerity now, no wonder those Italian banks are full of NPLs.
It's too late for Norway, Sweden, Canada and Australia's mainstream economists and Central Bankers, but we need to get this dismal neoclassical economics updated before the whole world descends into debt deflation.
It's almost here, there isn't much time.
Chuck another trillion in to keep this sinking ship afloat Central Bankers, we need to get our technocrat elite up to speed.Sound of the Suburbs , December 24, 2016 at 2:50 pm
Just look at the rate of change of the money supply/debt.
When it's rising rapidly you're in trouble as a credit bubble is forming.
A negative gradient is also a bad sign as it means your money supply is contracting, your economy is in trouble and debt deflation could be on its way.
Economists do waffle.Skip Intro , December 24, 2016 at 2:38 pm
Now Mrs. Yellen, put that on a Post-It note on your desk and you won't make the same mistake as your predecessor.Dick Burkhart , December 25, 2016 at 2:26 am
I am shocked, shocked I tell you, that a model with 'Equilibrium' right in the name fails to predict crises. They could probably do better just aggregating results from a big multi-player version of The Sims.
Better models should start from scratch, assuming non-linearity. They could take the Limits-to-Growth system of nonlinear pde's as a starting point, for example, to get a good handle on long range dynamics. Then add detailed submodels for money and debt, for different countries, for trade, for different economic sectors, etc. Use realistic agent based models where standard models are inadequate.
To do all, start by sending all those economics Ph.D.s back to school in other fields where they know how to do modern applied mathematics.
See original post for references
[Dec 24, 2016] If the 2018 elections will not be converted to verified paper ballots, accompanied by random auditing of all close elections, then it is clear that the accusations of Russian hacking were blatant lies
"... Another thing: it will be clear how serious they take the allegations of Russian hacking, by how they address the problem of auditing electronic voting machines. ..."
"... If the 2018 elections aren't all with voter verified paper ballots, accompanied by random auditing and auditing all close elections, we know the accusations of Russian hacking were blatant lies. ..."
Dec 24, 2016 | economistsview.typepad.com
John M -> John M ... December 23, 2016 at 07:17 PMAnother thing: it will be clear how serious they take the allegations of Russian hacking, by how they address the problem of auditing electronic voting machines.
If the 2018 elections aren't all with voter verified paper ballots, accompanied by random auditing and auditing all close elections, we know the accusations of Russian hacking were blatant lies.
[Dec 23, 2016] This is the time for stronger, more interventionist in internal policy state and the suppression of financial oligarchy
"... Democratic party under Bill Clinton became yet another neoliberal party (soft neoliberals) and betrayed both organized labour and middle class in favour of financial oligarchy. ..."
"... The cynical calculation was that "they have nowhere to go" and will vote for Democrats anyway. And that was true up to and including election of "change we can believe in" guy. After this attempt of yet another Clinton-style "bait and switch" trick failed. ..."
"... Now it is clear that far right picked up large part of those votes. So in a way Bill Clinton is the godfather of the US far right renaissances. The same is true for Hillary: her "kick the can down the road" stance made victory of Trump possible (although it surprised me; I expected that neoliberals were still strong enough to push their candidate down the US people throat) ..."
"... Under "democrat" Obama the USA pursued imperial policy of creating global neoliberal empire. The foreign policy remained essentially unchanged. Neocons were partially replaced with "liberal interventionists" which is the same staff in a different bottle. This policy costs the US tremendous amount of money and it is probable that the US is going the way British empire went -- overextending itself. ..."
"... Regional currency blocks are now a reality and arrangements bypass the usage of US dollar if international trade are common. They are now in place between several large countries such as Russia and China and absolutely nothing can reverse this trend. So dollar became virtualized -- a kind of "conversion gauge" but without profits for real conversion national currency to dollars for major TBTF banks. ..."
Dec 23, 2016 | economistsview.typepad.comFed C. Dobbs : , December 23, 2016 at 02:16 PM(So, how long will theanne -> Fed C. Dobbs... , December 23, 2016 at 02:23 PM
post-inaugural honeymoon last?
I'd give it no more than a month.
Then what? I dunno, but nothing good.)
Reality TV Populism
NYT - Paul Krugman - Dec 23
This Washington Post article on Poland - where a right-wing, anti-intellectual, nativist party now rules, and has garnered a lot of public support - is chilling for those of us who worry that Trump_vs_deep_state may really be the end of the road for US democracy. The supporters of Law and Justice clearly looked a lot like Trump's white working class enthusiasts; so are we headed down the same path?
(In Poland, a window on what happens when
populists come to power http://wpo.st/aHJO2
Washington Post - Anthony Faiola - December 18)
Well, there's an important difference - a bit of American exceptionalism, if you like. Europe's populist parties are actually populist; they pursue policies that really do help workers, as long as those workers are the right color and ethnicity. As someone put it, they're selling a herrenvolk welfare state. Law and Justice has raised minimum wages and reduced the retirement age; France's National Front advocates the same things.
Trump, however, is different. He said lots of things on the campaign trail, but his personnel choices indicate that in practice he's going to be a standard hard-line economic-right Republican. His Congressional allies are revving up to dismantle Obamacare, privatize Medicare, and raise the retirement age. His pick for Labor Secretary is a fast-food tycoon who loathes minimum wage hikes. And his pick for top economic advisor is the king of trickle-down.
So in what sense is Trump a populist? Basically, he plays one on TV - he claims to stand for the common man, disparages elites, trashes political correctness; but it's all for show. When it comes to substance, he's pro-elite all the way.
It's infuriating and dismaying that he managed to get away with this in the election. But that was all big talk. What happens when reality begins to hit? Repealing Obamacare will inflict huge harm on precisely the people who were most enthusiastic Trump supporters - people who somehow believed that their benefits would be left intact. What happens when they realize their mistake?
I wish I were confident in a coming moment of truth. I'm not. Given history, what we can count on is a massive effort to spin the coming working-class devastation as somehow being the fault of liberals, and for all I know it might work. (Think of how Britain's Tories managed to shift blame for austerity onto Labour's mythical fiscal irresponsibility.) But there is certainly an opportunity for Democrats coming.
And the indicated political strategy is clear: make Trump and company own all the hardship they're about to inflict. No cooperation in devising an Obamacare replacement; no votes for Medicare privatization and increasing the retirement age. No bipartisan cover for the end of the TV illusion and the coming of plain old, ugly reality.
Correcting the date:likbez : , -1
December 19, 2016
Reality TV Populism
By Paul KrugmanTwo points:
Democratic party under Bill Clinton became yet another neoliberal party (soft neoliberals) and betrayed both organized labour and middle class in favour of financial oligarchy.
The cynical calculation was that "they have nowhere to go" and will vote for Democrats anyway. And that was true up to and including election of "change we can believe in" guy. After this attempt of yet another Clinton-style "bait and switch" trick failed.
Now it is clear that far right picked up large part of those votes. So in a way Bill Clinton is the godfather of the US far right renaissances. The same is true for Hillary: her "kick the can down the road" stance made victory of Trump possible (although it surprised me; I expected that neoliberals were still strong enough to push their candidate down the US people throat)
Under "democrat" Obama the USA pursued imperial policy of creating global neoliberal empire. The foreign policy remained essentially unchanged. Neocons were partially replaced with "liberal interventionists" which is the same staff in a different bottle. This policy costs the US tremendous amount of money and it is probable that the US is going the way British empire went -- overextending itself.
Regional currency blocks are now a reality and arrangements bypass the usage of US dollar if international trade are common. They are now in place between several large countries such as Russia and China and absolutely nothing can reverse this trend. So dollar became virtualized -- a kind of "conversion gauge" but without profits for real conversion national currency to dollars for major TBTF banks.
So if we think about Iraq war as the way to prevent to use euro as alternative to dollar in oil sales that goal was not achieved and all blood and treasure were wasted.
In this sense it would be difficult to Trump to continue with "bastard neoliberalism" both in foreign policy and domestically and betray his election promises because they reflected real problems facing the USA and are the cornerstone of his political support.
Also in this case neocons establishment will simply get rid of him one way or the other. I hope that he understand this danger and will avoid trimming Social Security.
Returning to Democratic Party betrayal of interests of labour, Krugman hissy fit signifies that he does not understand the current political situation. Neoliberal wing of Democratic Party is now bankrupt both morally and politically. Trump election was the last nail into Bill Clinton political legacy coffin.
Now we returned to essentially the same political process that took place after the Great Depression, with much weaker political leaders, this time. So this is the time for stronger, more interventionist in internal policy state and the suppression of financial oligarchy. If Trump does not understand this he is probably doomed and will not last long.
That's why I think Trump inspired far right renaissance will continue and the political role of military might dramatically increase. And politically Trump is the hostage of this renaissance. Flint appointment in this sense is just the first swallow of increased role of military leaders in government.
[Dec 23, 2016] The Case for Protecting Infant Industries
"... The fact remains, however, that every single developed country got there by using protectionist policies to nurture the develop local industries. Protectionism in developed countries does have strongly negative consequences, but it is beneficial for developing economies. ..."
"... You are exactly right about Japan and I lived through that period. Please name one advanced economy which did not rely on protectionist laws to support domestic industries. All of the European industrial countries did it. The US did it. Japan and Korea did it. China is currently doing it and India has done it. ..."
"... Nobody cared about US labor or about hollowing out the US economy. Krugman frequently noted that the benefits to investors and 'strategic' considerations for free trade were more important that job losses. ..."
"... This extra demand for dollars as a commodity is what drives the price of the dollar higher, leading to the strategic benefits and economic hollowing out that I noted above. ..."
"... There really is no "post-industrialization era", no matter what fantasies the FIRE sector wants to sell. To the extent there is, the existing global trade agreements (including the WTO, World Bank, IMF, and related organization) accomplish that as well by privileging the position of first world capital. ..."
"... "Over the long haul, clearly automation's been much more important - it's not even close," said Lawrence Katz, an economics professor at Harvard who studies labor and technological change. No candidate talked much about automation on the campaign trail. Technology is not as convenient a villain as China or Mexico, there is no clear way to stop it, and many of the technology companies are in the United States and benefit the country in many ways. ..."
"... Globalization is clearly responsible for some of the job losses, particularly trade with China during the 2000s, which led to the rapid loss of 2 million to 2.4 million net jobs, according to research by economists including Daron Acemoglu and David Autor of M.I.T. ..."
"... People who work in parts of the country most affected by imports generally have greater unemployment and reduced income for the rest of their lives, Mr. Autor found in a paper published in January. Still, over time, automation has had a far bigger effect than globalization, and would have eventually eliminated those jobs anyway, he said in an interview. "Some of it is globalization, but a lot of it is we require many fewer workers to do the same amount of work," he said. "Workers are basically supervisors of machines." ..."
"... Clarification of 3: that is, infant industry protection as traditionally done, i.e. "picking winners", won't help. What would help is structural changes that make things relatively easier for small enterprises and relatively harder for large ones. ..."
"... Making direct lobbying of state and federal politicians by industry groups and companies a crime punishable by 110% taxation of net income on all the participants would be a start. ..."
"... "Over time, automation has generally had a happy ending: As it has displaced jobs, it has created new ones. But some experts are beginning to worry that this time could be different. Even as the economy has improved, jobs and wages for a large segment of workers - particularly men without college degrees doing manual labor - have not recovered." ..."
"... So why have manufacturing jobs plummeted since 2000? One answer is that the current account deficit is the wrong figure, since it also includes our surplus in trade in services. If you just look at goods, the deficit is closer to 4.2% of GDP. ..."
"... trade interacts with automation. Not only do we lose jobs in manufacturing to automation, but trade leads us to re-orient our production toward goods that use relatively less labor (tech, aircraft, chemicals, farm produces, etc.), while we import goods like clothing, furniture and autos. ..."
"... There are industries that are closely connected with the sovereignty of the country. That's what neoliberals tend to ignore as they, being closet Trotskyites ("Financial oligarchy of all countries unite!" instead of "Proletarian of all countries unite!" ;-) do not value sovereignty and are hell bent on the Permanent Neoliberal Revolution to bring other countries into neoliberal fold (in the form of color revolutions, or for smaller countries, direct invasions like in Iraq and Libya ). ..."
"... Neoliberal commenters here demonstrate complete detachment from the fact that like war is an extension of politics, while politics is an extension of economics. For example, denying imports can and is often used for political pressure. ..."
"... Now Trump want to play this game selectively designating China as "evil empire" and providing a carrot for Russia. Will it works, or Russia can be wiser then donkeys, I do not know. ..."
"... The US propagandists usually call counties on which they impose sanction authoritarian dictatorships to make such actions more politically correct, but the fact remains: The USA as a global hegemon enjoys using economic pressure to crush dissidents and put vassals in line. ..."
"... Neoliberalism as a social system is past it pinnacle and that creates some problems for the USA as the central player in the neoliberal world. The triumphal march of neoliberalism over the globe ended almost a decade ago. ..."
Dec 23, 2016 | economistsview.typepad.comNoah Smith:The Case for Protecting Infant Industries : I must say, it's been almost breathtaking to see how fast the acceptable terms of debate have shifted on the subject of trade. Thanks partly to President-elect Donald Trump's populism and partly to academic research showing that the costs of free trade could be higher than anyone predicted, economics commentators are now happy to lambast the entire idea of trade. I don't want to do that -- I think a nuanced middle ground is best. But I do think it's worth reevaluating one idea that the era of economic dogmatism had seemingly consigned to the junk pile -- the notion of infant-industry protectionism. ...DrDick -> pgl...DrDick -> sanjait... , December 22, 2016 at 04:52 PM
The fact remains, however, that every single developed country got there by using protectionist policies to nurture the develop local industries. Protectionism in developed countries does have strongly negative consequences, but it is beneficial for developing economies.You are exactly right about Japan and I lived through that period. Please name one advanced economy which did not rely on protectionist laws to support domestic industries. All of the European industrial countries did it. The US did it. Japan and Korea did it. China is currently doing it and India has done it.JohnH -> pgl... , -1Japan and other developed countries took advantage of the strong dollar/reserve currency, which provided their industries de facto protection from US exports along with a price umbrella that allowed them export by undercutting prices on US domestic products. The strong dollar was viewed as a strategic benefit to the US, since it allowed former rivals to develop their economies while making them dependent on the US consumer market, the largest in the world. The strong dollar also allowed the US to establish bases and fight foreign wars on the cheap, while allowing Wall Street to buy foreign economies' crown jewels on the cheap.JohnH -> anne... , December 22, 2016 at 05:06 PM
Nobody cared about US labor or about hollowing out the US economy. Krugman frequently noted that the benefits to investors and 'strategic' considerations for free trade were more important that job losses.Even pgl's guy, Milton Friedman, recognized that "overseas demand for dollars allows the United States to maintain persistent trade deficits without causing the value of the currency to depreciate or the flow of trade to re-adjust."John San Vant -> JohnH... , -1
This extra demand for dollars as a commodity is what drives the price of the dollar higher, leading to the strategic benefits and economic hollowing out that I noted above.That is because you get a persistent trade surplus in services, which offsets the "Goods" trade deficit. The currency depreciated in the 2000's because said surplus in services began to decline creating a real trade deficit.DrDick -> Mike Sparrow... , December 22, 2016 at 04:57 PManne -> DrDick... , -1"What about the post-industrialization era?"
There really is no "post-industrialization era", no matter what fantasies the FIRE sector wants to sell. To the extent there is, the existing global trade agreements (including the WTO, World Bank, IMF, and related organization) accomplish that as well by privileging the position of first world capital.There really is no "post-industrialization era", no matter what fantasies the Finance, Insurance, and Real Estate sectors want to sell....Greg : , -1
[ Interesting assertion. Do develop this further. ]The Long-Term Jobs Killer Is Not China. It's Automation.anne -> Greg... , December 22, 2016 at 01:08 PM
( http://www.nytimes.com/2016/12/21/upshot/the-long-term-jobs-killer-is-not-china-its-automation.html?ref=economy&_r=0 )
1. I'm moderately surprised that this piece hasn't shown up in Links.
2. The Lump of Labor Fallacy is exposed as a fallacy - Sandwichman has been right all along.
3. Infant industry protection won't help in this environmenthttp://www.nytimes.com/2016/12/21/upshot/the-long-term-jobs-killer-is-not-china-its-automation.htmlGreg -> Greg... , December 22, 2016 at 01:08 PM
December 21, 2016
The Long-Term Jobs Killer Is Not China. It's Automation.
By Claire Cain Miller
The first job that Sherry Johnson, 56, lost to automation was at the local newspaper in Marietta, Ga., where she fed paper into the printing machines and laid out pages. Later, she watched machines learn to do her jobs on a factory floor making breathing machines, and in inventory and filing.
"It actually kind of ticked me off because it's like, How are we supposed to make a living?" she said. She took a computer class at Goodwill, but it was too little too late. "The 20- and 30-year-olds are more up to date on that stuff than we are because we didn't have that when we were growing up," said Ms. Johnson, who is now on disability and lives in a housing project in Jefferson City, Tenn.
Donald J. Trump told workers like Ms. Johnson that he would bring back their jobs by clamping down on trade, offshoring and immigration. But economists say the bigger threat to their jobs has been something else: automation.
"Over the long haul, clearly automation's been much more important - it's not even close," said Lawrence Katz, an economics professor at Harvard who studies labor and technological change. No candidate talked much about automation on the campaign trail. Technology is not as convenient a villain as China or Mexico, there is no clear way to stop it, and many of the technology companies are in the United States and benefit the country in many ways.
Mr. Trump told a group of tech company leaders last Wednesday: "We want you to keep going with the incredible innovation. Anything we can do to help this go along, we're going to be there for you."
Andrew F. Puzder, Mr. Trump's pick for labor secretary and chief executive of CKE Restaurants, extolled the virtues of robot employees over the human kind in an interview with Business Insider in March. "They're always polite, they always upsell, they never take a vacation, they never show up late, there's never a slip-and-fall, or an age, sex or race discrimination case," he said.
Globalization is clearly responsible for some of the job losses, particularly trade with China during the 2000s, which led to the rapid loss of 2 million to 2.4 million net jobs, according to research by economists including Daron Acemoglu and David Autor of M.I.T.
People who work in parts of the country most affected by imports generally have greater unemployment and reduced income for the rest of their lives, Mr. Autor found in a paper published in January. Still, over time, automation has had a far bigger effect than globalization, and would have eventually eliminated those jobs anyway, he said in an interview. "Some of it is globalization, but a lot of it is we require many fewer workers to do the same amount of work," he said. "Workers are basically supervisors of machines."
When Greg Hayes, the chief executive of United Technologies, agreed to invest $16 million in one of its Carrier factories as part of a Trump deal to keep some jobs in Indiana instead of moving them to Mexico, he said the money would go toward automation.
"What that ultimately means is there will be fewer jobs," he said on CNBC....Clarification of 3: that is, infant industry protection as traditionally done, i.e. "picking winners", won't help. What would help is structural changes that make things relatively easier for small enterprises and relatively harder for large ones.anne -> Greg... , December 22, 2016 at 01:09 PM
Making direct lobbying of state and federal politicians by industry groups and companies a crime punishable by 110% taxation of net income on all the participants would be a start.http://cepr.net/blogs/beat-the-press/what-s-different-about-stagnating-wages-for-workers-without-college-degreesPeter K. : , -1
December 21, 2016
What's Different About Stagnating Wages for Workers Without College Degrees
There seems to be a great effort to convince people that the displacement due to the trade deficit over the last fifteen years didn't really happen. The New York Times contributed to this effort with a piece * telling readers that over the long-run job loss has been primarily due to automation not trade.
While the impact of automation over a long enough period of time certainly swamps the impact of trade, over the last 20 years there is little doubt that the impact of the exploding trade deficit has had more of an impact on employment. To make this one as simple as possible, we currently have a trade deficit of roughly $460 billion (@ 2.6 percent of GDP). Suppose we had balanced trade instead, making up this gap with increased manufacturing output.
Does the NYT want to tell us that we could increase our output of manufactured goods by $460 billion, or just under 30 percent, without employing more workers in manufacturing? That would be pretty impressive. We currently employ more than 12 million workers in manufacturing, if moving to balanced trade increase employment by just 15 percent we would be talking about 1.8 million jobs. That is not trivial.
But this is not the only part of the story that is strange. We are getting hyped up fears over automation even at a time when productivity growth (i.e. automation) has slowed to a crawl, averaging just 1.0 percent annually over the last decade. The NYT tells readers:
"Over time, automation has generally had a happy ending: As it has displaced jobs, it has created new ones. But some experts are beginning to worry that this time could be different. Even as the economy has improved, jobs and wages for a large segment of workers - particularly men without college degrees doing manual labor - have not recovered."
Hmmm, this time could be different? How so? The average hourly wage of men with just a high school degree was 13 percent less in 2000 than in 1973. ** For workers with some college it was down by more than 2.0 percent. In fact, stagnating wages for men without college degrees is not something new and different, it has been going on for more than forty years. Hasn't this news gotten to the NYT yet?
-- Dean Bakerhttp://jaredbernsteinblog.com/inequality-technology-globalization-and-the-false-assumptions-that-sustain-current-inequities/Peter K. : , -1
Inequality, technology, globalization, and the false assumptions that sustain current inequities
by Jared Bernstein
December 22nd, 2016 at 3:24 pm
Here's a great interview* with inequality scholar Branko Milanovic wherein he brings a much-needed historical and international perspective to the debate (h/t: C. Marr). Many of Branko's points are familiar to my readers: yes, increased trade has upsides, for both advanced and emerging economies. But it's not hard to find significant swaths hurt by globalization, particularly workers in rich economies who've been placed into competition with those in poorer countries. The fact that little has been done to help them is one reason for president-elect Trump.
As Milanovic puts it:
"The problems with globalization arise from the fact that gains from it are not (and can never be) evenly distributed. There would be always those who gain less than some others, or those who lose even in absolute terms. But to whom can they "appeal" for redress? Only to their national governments because this is how the world is politically organized. Thus national governments have to engage in "mop up" operations to fix the negative effects of globalization. And this they have not done well, led as they were by the belief that the trickle-down economics will take care of it. We know it did not."
But I'd like to focus on a related point from Branko's interview, one that gets less attention: the question of whether it was really exposure to global trade or to labor-saving technology that is most responsible for displacing workers. What's the real problem here: is it the trade deficit or the robots?
Branko cogently argues that "both technological change and economic polices responded to globalization. The nature of recent technological progress would have been different if you could not employ labor 10,000 miles away from your home base." Their interaction makes their relative contributions hard to pull apart.
I'd argue that the rise of trade with China, from the 1990s to the 2007 crash, played a significant role in moving US manufacturing employment from its steady average of around 17 million factory jobs from around 1970 to 2000, to an average today that's about 5 million less (see figure below; of course, manufacturing employment was falling as a share of total jobs over this entire period).
* https://newrepublic.com/article/139432/understand-2016s-politics-look-winners-losers-globalizationmarket monetarist Scott Sumner makes a good point about the post-war years.If Economists hadn't ignored US and World Economic History they would have had a clue : , December 22, 2016 at 07:53 PM
Do current account deficits cost jobs
Over at Econlog I have a post that suggests the answer is no, CA deficits do not cost jobs.
But suppose I'm wrong, and suppose they do cost jobs. In that case, trade has been a major net contributor to American jobs during the 21st century, as our deficit was about 4% of GDP during the 2000 tech boom, and as large as 6% of GDP during the 2006 housing boom. Today it is only 2.6% of GDP. So if you really believe that rising trade deficits cost jobs, you'd be forced to believe that the shrinking deficits since 2000 have created jobs.
So why have manufacturing jobs plummeted since 2000? One answer is that the current account deficit is the wrong figure, since it also includes our surplus in trade in services. If you just look at goods, the deficit is closer to 4.2% of GDP.
But even that doesn't really explain very much, because it's slightly lower than the 4.35% of GDP trade deficit in goods back in 2000. So again, the big loss of manufacturing jobs is something of a mystery. Yes, we import more goods than we used to, but exports of goods have risen at about the same rate since 2000. So why does it seem like trade has devastated our manufacturing sector?
Perhaps because trade interacts with automation. Not only do we lose jobs in manufacturing to automation, but trade leads us to re-orient our production toward goods that use relatively less labor (tech, aircraft, chemicals, farm produces, etc.), while we import goods like clothing, furniture and autos.
So trade and automation are both parts of a bigger trend, Schumpeterian creative destruction, which is transforming big areas of our economy. It's especially painful as during the earlier period of automation (say 1950-2000) the physical output of goods was still rising fast. So the blow of automation was partly cushioned by a rise in output. (Although not in the coal and steel industries!) Since 2000, however, we've seen slower growth in physical output for a number of reasons, including slower workforce growth, a shift to a service economy, and a home building recession (which normally absorbs manufactured goods like home appliances, carpet, etc.) We are producing more goods than ever, but with dramatically fewer workers.
Update: Steve Cicala sent me a very interesting piece on coal that he had published in Forbes. Ironically, environmental regulations actually helped West Virginia miners, by forcing utilities to install scrubbers that cleaned up emissions from the dirtier West Virginia coal. (Wyoming coal has less sulfur.) He also discusses the issue of competition from natural gas.The historical record is totally unambiguous. Protectionism always leads to wealth and industrial development. Free trade leads you to the third world. This was true four hundred years ago with mercantilist England and the navigation acts; it was true with Lincoln's tariffs in the 1860's, it was true of East Asia post 1945.Peter K. : , -1
Economists better abandon silly free trade if they want to have any credibility and not be seen as quacks.http://www.cnn.com/2016/12/21/politics/donald-trump-tariffs/likbez : , December 23, 2016 at 08:25 AM
Trump team floats a 10% tariff on imports
By John King and Jeremy Diamond, CNN
Updated 3:57 PM ET, Thu December 22, 2016
Washington (CNN)President-elect Donald Trump's transition team is discussing a proposal to impose tariffs as high as 10% on imports, according to multiple sources.
A senior Trump transition official said Thursday the team is mulling up to a 10% tariff aimed at spurring US manufacturing, which could be implemented via executive action or as part of a sweeping tax reform package they would push through Congress.
Incoming White House Chief of Staff Reince Priebus floated a 5% tariff on imports in meetings with key Washington players last week, according to two sources who represent business interests in Washington. But the senior transition official who spoke to CNN Thursday on the condition of anonymity said the higher figure is now in play.
Such a move would deliver on Trump's "America First" campaign theme, but risks drawing the US into a trade war with other countries and driving up the cost of consumer goods in the US. And it's causing alarm among business interests and the pro-trade Republican establishment.
The senior transition official said the transition team is beginning to find "common ground" with House Speaker Paul Ryan and Ways and Means Committee Chairman Kevin Brady, pointing in particular to the border adjustment tax measure included in House Republicans' "Better Way" tax reform proposal, which would disincentivize imports through tax policy.
Aides to Ryan and Brady declined to say they had "common ground" with Trump, but acknowledged they are in deep discussions with transition staffers on the issue.
Curbing free trade was a central element of Trump's campaign. He promised to rip up the North American Free Trade Agreement with Mexico and Canada. He also vowed to take a tougher line against other international trading partners, almost always speaking harshly of China but often including traditional US allies such as Japan in his complaint that American workers get the short end of the stick under current trade practices.
Gulf with GOP establishment
It is an area where there is a huge gulf between Trump's stated positions and traditional GOP orthodoxy. Business groups and GOP establishment figures -- including Ryan and Senate Majority Leader Mitch McConnell -- have been hoping the transition from the campaign to governing would bring a different approach.
Ryan did signal in a CNBC interview earlier this month that Trump's goals of spurring US manufacturing could be accomplished through "comprehensive tax reform."
"I'll tell him what I've been saying all along, which is we can get at what he's trying to get at better through comprehensive tax reform," Ryan said.
The pro-business GOP establishment says the new Trump administration could make clear it would withdraw from NAFTA unless Canada and Mexico entered new talks to modernize the agreement to reflect today's economy. That would allow Trump to say he kept a promise to make the agreement fairer to American workers without starting a trade war and exacerbating tensions with America's neighbors and vital economic partners.
But there remain establishment jitters that Trump, who views his tough trade message as critical to his election victory, will look for ways to make an early statement that he is serious about reshaping the trade playing field.
And when Priebus told key Washington players that the transition is mulling a 5% tariff on imports, the reaction was one of fierce opposition, according to two sources who represent business interests in Washington and spoke on condition of anonymity because the conversations with the Trump team were confidential.
Priebus, the sources said, was warned such a move could start trade wars, anger allies, and also hurt the new administration's effort to boost the rate of economic growth right out of the gate.
Role of Wilbur Ross
One of the sources said he viewed the idea as a trial balloon when first raised, and considered it dead on arrival given the strong reaction in the business community -- and the known opposition to such protectionist ideas among the GOP congressional leadership.
But this source voiced new alarm Tuesday after being told by allies within the Trump transition that defending new tariffs was part of the confirmation "murder board" practice of Wilbur Ross, the President-elect's choice for commerce secretary.
At least one business community organization is worried enough about the prospect of the tariff it already has prepared talking points, obtained by CNN Wednesday night.
"This $100 billion tax on American consumers and industry would impose heavy costs on the US economy, particularly for the manufacturing sector and American workers, with highly negative political repercussions," according to the talking points. "Rather than using a trade policy sledgehammer that would inflict serious collateral damage, the Trump administration should use the scalpel of US trade remedy law to achieve its goals."
The talking points also claim the tariffs would lead to American job loss and result in a tax to consumers, both of which would harm the US economy.
Trump aides have signaled that Ross is likely to be a more influential player in trade negotiations than recent Commerce secretaries. Given that, the aides know his confirmation hearings are likely to include tough questioning -- from both Democrats and Republicans -- about Trump's trade-related campaign promises.
"The way it was cast to me was that (Trump) and Ross are all over it," said one source. "It is serious."
The second source was less certain about whether the tariff idea was serious or just part of a vigorous debate about policy options. But this source said the unpredictability of Trump and his team had the business interests nervous.
The business lobbying community is confident the GOP leadership would push back on any legislative effort to impose tariffs, which organizations like the Chamber of Commerce, the Business Roundtable, the National Association of Manufactures and others, including groups representing farmers, believe would lead to retaliation against US industries heavily dependent on exports.
But the sources aligned with those interests told CNN the conversation within the Trump transition includes using executive authority allowed under existing trade laws. Different trade laws enacted over the course of the past century allow the president to impose tariffs if he issues a determination the United States is being subjected to unfair trade practices or faces an economic or national security threat because of trade practices.There are industries that are closely connected with the sovereignty of the country. That's what neoliberals tend to ignore as they, being closet Trotskyites ("Financial oligarchy of all countries unite!" instead of "Proletarian of all countries unite!" ;-) do not value sovereignty and are hell bent on the Permanent Neoliberal Revolution to bring other countries into neoliberal fold (in the form of color revolutions, or for smaller countries, direct invasions like in Iraq and Libya ).
For example, if you depends of chips produced outside the country for your military or space exploration, then sabotage is possible (or just pure fraud -- selling regular ships instead of special tolerant to cosmic radiation or harsh conditions variant; actually can be done with the support of internal neoliberal fifth column).
The same is probably true for cars and auto engines. If you do not produce domestically a variety at least some domestic brans of cars and trucks, your military trucks and engines will be foreign and that will cost you tremendous amount of money and you might depend for spare parts on you future adversary. Also such goods are overprices to the heaven. KAS is a clear example of this as they burn their money in the war with Yemen as there is no tomorrow making the US MIC really happy.
So large countries with say over 100 million people probably need to think twice before jumping into neoliberal globalization bandwagon and relying in imports for strategically important industries.
Neoliberal commenters here demonstrate complete detachment from the fact that like war is an extension of politics, while politics is an extension of economics. For example, denying imports can and is often used for political pressure.
That was one of factors that doomed the USSR. Not that the system has any chance -- it was doomed after 1945 as did not provide for higher productivity then advanced capitalist economies.
But this just demonstrates the power of the US sanctions mechanism. Economic sanctions works and works really well. The target country is essentially put against the ropes and if you unprepared you can be knocked down.
For example now there are sanctions against Russia that deny them advanced oil exploration equipment. And oil is an important source of Russia export revenue. So the effect of those narrow prohibitions multiples by factor of ten by denying Russia export revenue.
That's how an alliance between Russia and China was forged by Obama administration. because China does produce some of this equipment now. And Russia paid dearly for that signing huge multi-year deals with China on favorable for China terms.
Now Trump want to play this game selectively designating China as "evil empire" and providing a carrot for Russia. Will it works, or Russia can be wiser then donkeys, I do not know.
And look what countries are on the USA economic sanctions list: many entries are countries that are somewhat less excited about the creation of the global neoliberal empire led by the USA. KAS and Gulf monarchies are not on the list. So much about "spreading democracy".
The US propagandists usually call counties on which they impose sanction authoritarian dictatorships to make such actions more politically correct, but the fact remains: The USA as a global hegemon enjoys using economic pressure to crush dissidents and put vassals in line.
The problem with tariffs on China is an interesting reversion of the trend: manufacturing is already in China and to reverse this process now is an expensive proposition. So alienating Chinese theoretically means that some of USA imports might became endangered, despite huge geopolitical weight of the USA. They denied export of rare metals to Japan in the past. They can do this for Apple and without batteries Apple can just fold.
Also it is very easy to prohibit Apple sales in China of national security grounds (any US manufacturer by definition needs to cooperate with NSA and other agencies). I think some countries already prohibit the use of the USA companies produced cell phones for government officials.
So if Trump administration does something really damaging, for Chinese there are multiple ways to skin the cat. Neoliberalism as a social system is past it pinnacle and that creates some problems for the USA as the central player in the neoliberal world. The triumphal march of neoliberalism over the globe ended almost a decade ago.
[Dec 23, 2016] Republicans try link cutting Social Security with balancing budget but they face a fundamental problem with their math duto to need to granfather people older then 55
Just doubling the ceiling for SS contributions will sove the problem. $120K is too low.
Dec 23, 2016 | economistsview.typepad.comlikbez : December 23, 2016 at 04:07 PM
"One neat trick to stop Social Security 'Reform'"
=== quote ===
Republicans constantly try to bring Social Security into ongoing debates about 'Balanced Budgets'. But they face a fundamental problem with their math. For a variety of reasons, some quite reasonable and others nakedly political (seniors vote) nearly every 'Reform' proposal out there promises to hold 55 and older harmless. Meaning you can't have any more than miniscule effects on Cost projections until today's 54′s and younger start retiring. Except for a handful of early retirees that event happens 11+ years in the future, which is to say outside the 10 year Budget Scoring window.
You can't have a fix to a problem scored over 10 years with a solution starting Year 11. Sure the 'Reformers' will blather about "Infinite Future Horizons". But any proposal that spares current seniors from cuts will score close to zero by CBO and JCT. You just have to count years on your fingers.
... ... ...
GOP plans to "reform" Social Security often take this form
1. Amιricas $20 trillion public debt is unsustainable
2. Current Budget Deficits add to that debt
So far so good
3. Social Security must be part of that discussion
4. 55 and orders must be shielded from changes that allow them no time to adjust
5. (The Bush/Krasting argument) Payrolll tax increases across the board are neither politically possible nor econimically wise
All three of these are doubtful. This post points out that 2 and 3 +4 (2nd edit) are incompatible within a structure that assumes 10 year budget scoring. Argue or acknowledge that specific point and we can move on.
... ... ..
GOP point one is interesting on several fronts. One it is debatable on its own terms. It it is not clear that current Public Debt is unsustainable on a percentage of GDP basis, especially when you take that in the form of Debt Service at current and projected 10 year rates. A $10 trillion debt at 8% (roughly Bush era) is twice as expensive as a $20 trillion debt at 2% in debt service terms and assuming principal rollover. Simply put Obama years have seen a massive refi of Public Debt. Much credit for which belongs to the Feds QE1 and QE 2.
... ... ..
Jim A, December 15, 2016 11:31 am
Of course that 22% benefit cut is an illusion created by thinking that the SS trust fund is something more substantial than your left pocket borrowing from your right pocket and giving it IOUs.
Assuming that we were to simply run out the clock and make no changes to SS until the trust fund ran out. On the day before the trust fund ran out we would have combined general revenues and government borrowing sufficient to redeem the special, non-negotiable bonds held in the trust fund. On the day afterwards, the general revenue and the ability to the US treasury to borrow money wouldn't have changed. Under current law we would at that point be forced to cut benefits to all retirees by 22%.
Presumably that 22% of revenue that was NOT being spent to repay the trust fund would be applied as deficit reduction. Or used for tax cuts or new discretionary spending. Of course those are all political impossibilities, and would never happen.
It is important to the Republicans that want to reform SS that people never realize that we can afford to pay the shortfall in SS revenues from the treasury. Because once people realize that, they will be more comfortable with that than they will be with the alternatives.
[Dec 23, 2016] Top Ex-White House Economist Admits 94% Of All New Jobs Under Obama Were Part-Time
Growing inequality. We are already at Gini coefficients normally only found in banana republics.
"... from 2005 to 2015, the proportion of Americans workers engaged in what they refer to as "alternative work" soared during the Obama era, from 10.7% in 2005 to 15.8% in 2015. Alternative, or "gig" work is defined as "temporary help agency workers, on-call workers, contract company workers, independent contractors or freelancers", and is generally unsteady, without a fixed paycheck and with virtually no benefits. ..."
"... The two economists also found that each of the common types of alternative work increased from 2005 to 2015-with the largest changes in the number of independent contractors and workers provided by contract firms, such as janitors that work full-time at a particular office, but are paid by a janitorial services firm. ..."
Dec 23, 2016 | www.zerohedge.comJust over six years ago, in December of 2010, we wrote " Charting America's Transformation To A Part-Time Worker Society ", in which we predicted - and showed - that in light of the underlying changes resulting from the second great depression, whose full impacts remain masked by trillions in monetary stimulus and soon, perhaps fiscal, America is shifting from a traditional work force, one where the majority of new employment is retained on a full-time basis, to a "gig" economy, where workers are severely disenfranchised, and enjoy far less employment leverage, job stability and perks than their pre-crash peers. It also explains why despite the 4.5% unemployment rate, which the Fed has erroneously assumed is indicative of job market at "capacity", wage growth not only refuses to materialize, but as we showed yesterday, the growth in real disposable personal income was the lowest since 2014 .
When we first penned our article, it was dubbed "fringe" tinfoil hattery, or in the latest vernacular, "fake news."
Fast forward 6 years, when a report by Harvard and Princeton economists Lawrence Katz and Alan Krueger , confirms exactly what we warned. In their study, the duo show that from 2005 to 2015, the proportion of Americans workers engaged in what they refer to as "alternative work" soared during the Obama era, from 10.7% in 2005 to 15.8% in 2015. Alternative, or "gig" work is defined as "temporary help agency workers, on-call workers, contract company workers, independent contractors or freelancers", and is generally unsteady, without a fixed paycheck and with virtually no benefits.
The two economists also found that each of the common types of alternative work increased from 2005 to 2015-with the largest changes in the number of independent contractors and workers provided by contract firms, such as janitors that work full-time at a particular office, but are paid by a janitorial services firm.
Krueger, who until 2013 was also the top White House economist serving as chairman of the Council of Economic Advisers under Obama, was "surprised" by the finding.
Quoted by quartz , he said " We find that 94% of net job growth in the past decade was in the alternative work category ," said Krueger. "And over 60% was due to the [the rise] of independent contractors, freelancers and contract company workers." In other words, nearly all of the 10 million jobs created between 2005 and 2015 were not traditional nine-to-five employment.
While the finding is good news for some, such as graphic designers and lawyers who hate going to an office, for whom new technology and Obamacare has made it more appealing to become an independent contractor. But for those seeking a steady administrative assistant office job, the market is grim. It also explains why despite an apparent recovery in the labor market, wage growth has been non-existant, due to the lack of career advancement and salary increase options for this vast cohort which was hired over the past decade.
The decline of conventional full-time work has impacted every demographic. Whether this change is good or bad depends on what kinds of jobs people want. " Workers seeking full-time, steady work have lost," said Krueger. He then added, perhaps sarcastically, that "while many of those who value flexibility and have a spouse with a steady job have probably gained."
Yes, well, spousal support aside, it also confirms another troubling finding this website reported first earlier this month, namely that the number of multiple jobholders has recently hit the highest number this century.
[Dec 22, 2016] Traders Place Massive Bets That 10Y Yields Tumble To 2% By February Zero Hedge
Dec 22, 2016 | www.zerohedge.com
It appears not everyone is convinced that "the 30 year bond bull is dead." A quick glance across US equity options today shows TLT (the long-end Treasury Bond ETF) is the most active with call volumes (bullish bonds, lower rates) more than double their average , with over $1.3 billion notional in February $126 Calls (which will payoff if rates drop to around 2.00% by then ).
[Dec 22, 2016] Wolf Richter What the Heck's Happening to Our Share Buyback Boom naked capitalism
"... [Afterall, I don't think she really believes that the national debt really matters; she knows better than that and if she doesn't she doesn't deserve to be in the Fed Reserve.] ..."
"... [The above said, I'm still not sure that the Fed Reserve controls the Fed Funds rate. For the last so many decades the Fed Funds rate has followed the 13 week treasury market. Even the rate hike this last week was consistent with this. Which begs the question. Is the 13 week treasury anticipating the Fed rate hike? If so, the 13 week treasury seems to know when the Fed will blink. The easier explanation is that the Fed Reserve is simply tacking on their profit margin on top of the 13 week treasury. In which case, Trump's enemy isn't the Fed Reserve. Rather it's bond vigilantes on the short-end of the curve. Still if bond vigilantes really are the controlling influence, they were certainly slow to respond during the last two bubbles.] ..."
Dec 22, 2016 | www.nakedcapitalism.comCompanies in the S&P 500 spent about $3 trillion since 2011 to buy back their own shares, often with borrowed money. It's part of a noble magic called financial engineering, the simplest way to goose the all-important metric of earnings per share (by lowering the number of shares outstanding). And it creates buying pressure in the stock market that drives up share prices.
With buybacks, you don't need to sell one extra iPhone to boost your earnings per share. So the amounts have grown and grown. With ultra-cheap money available to borrow endlessly, companies take on debt and hollow out shareholder equity. It has worked like a charm. Stock prices have soared. Declining revenues and earnings, no problem. But something is happening that hasn't happened since the Financial Crisis.
Share buybacks in the third quarter plunged 28% year-over-year, to $115.6 billion, the biggest year-over-year dive since Q3 2009, according to FactSet . It was the second quarter in a row of declines, from the glorious Q1 this year, when buybacks had reached $168 billion, behind only Q3 2007 before it all came apart.
From that great Q1 2016 to Q3, buybacks plunged 31%, or by $52 billion.
"Only" 362 of the S&P 500 companies bought back shares in Q3, the second lowest number in three years, with Q2 having been the lowest number (blue line in the chart below). Steve , December 21, 2016 at 8:05 amDJG , December 21, 2016 at 9:27 am
Interesting post, no wonder Wall St is talking up the opposite? http://blogs.wsj.com/moneybeat/2016/11/21/goldman-sees-30-buyback-surge-in-2017/Chauncey Gardiner , December 21, 2016 at 10:10 am
One of the advantages of reading Naked Capitalism: I finally understood what stock buybacks are about. So when proxy seasons arrives, and I get to vote my 12.5 shares in the old SEP and IRA, I vote against the proposals. Not that I expect to have much influence.djrichard , December 21, 2016 at 10:38 am
I suspect Q4 2016 will show a resurgence in corporate share buybacks. Having the corporations they control borrow money and expend the cash to buy their shares back at high prices maximizes personal financial gains for CEOs from their stock option grants, and many corporate board members who are in a position to approve these buybacks also benefit. Very few of these individuals founded the companies they lead or have significantly contributed to the organic growth of their organizations. In fact, in many cases the reverse is true.
This practice merely appears to be another form of control looting to me. I find it particularly troublesome when the corporations engaged in this practice enjoy large government contracts, large numbers of employees are subsequently laid off during economic downturns as an inevitable result of the decline in corporations' financial resilience, and corporations seek various forms of government assistance, including tax forbearances at the state and local level.
There are ways to address this damaging practice. One way is to aggressively raise taxes on executive stock option income. Another way is to simply outlaw the practice.djrichard , December 21, 2016 at 11:29 am
If rates on long term bonds go up, then all this corporate debt will eventually have to be rolled into something that causes pain.
And that's what is beginning to happen. Presumably because of Trump being in office and the fiscal spigots being turned on.
I'm beginning to wonder if this is why Yellen is jawboning against fiscal stimulus by Trump. It's not that her target is fiscal spending per se. [Afterall, I don't think she really believes that the national debt really matters; she knows better than that and if she doesn't she doesn't deserve to be in the Fed Reserve.] Rather, I'm thinking her real target is long term bonds and trying to keep the rates down. To protect the debt load taken on by the corporations.
Which would make Yellen even more evil of course. Because when it comes down to cash flow to people vs asset inflation to corporations and the wealthy, it would mean she's landing squarely on the latter.BenX , December 21, 2016 at 11:38 am
More on Yellen vs Trump: http://www.businessinsider.com/fed-yellen-call-ruin-trump-fiscal-stimulus-2016-12 . Which is why I voted for Trump and not Yellen, lol.
Anyways, in theory the only weapon she's got really is the Fed Funds rate which drives the short end of the curve. However, she could invert the yield curve, which is the normal tell to market participants to get out of the market in anticipation of a significant down-turn. So her weapon vis-a-vis Trump is that she can tank the market. My advice to Trump would be to call her on this and to use his bully pulpit to let his constituency know the lengths that the Fed Reserve is willing to go to (tank the market) to fight him on infrastructure spending.
If Trump really wants to go Full Monty and amp it up a notch, declare that the Fed Reserve's primary interest is to protect the "wealth effect". Such that the common bloke must be thrown under the bus. "becuz inflation don't you know". Man how I would love to see Trump play this hand.
[The above said, I'm still not sure that the Fed Reserve controls the Fed Funds rate. For the last so many decades the Fed Funds rate has followed the 13 week treasury market. Even the rate hike this last week was consistent with this. Which begs the question. Is the 13 week treasury anticipating the Fed rate hike? If so, the 13 week treasury seems to know when the Fed will blink. The easier explanation is that the Fed Reserve is simply tacking on their profit margin on top of the 13 week treasury. In which case, Trump's enemy isn't the Fed Reserve. Rather it's bond vigilantes on the short-end of the curve. Still if bond vigilantes really are the controlling influence, they were certainly slow to respond during the last two bubbles.]Tim , December 21, 2016 at 2:37 pm
"And much of it is funded with debt" and that has been getting more expensive. The Trump rally is likely due to an expectation of plus laissez faire, whether it be intent or negligence, it matters not.RenoDino , December 21, 2016 at 10:53 pm
I'd like to see share buybacks on the same graph as relevant interest rates, to get an idea of you much potential causation is there between interest rates and share buybacks
Trump is not a fan of the stock market and will to nothing to protect it. He has said repeatedly that the market is in a bubble. When it crashes, he'll say he was right. This Trump rally is not his idea and investors will be shocked when they finally realize stock prices mean absolutely nothing to him. This is not the metric he will use to measure his success, unlike every President before him for the last 20 years.
[Dec 22, 2016] Regulatory Capture 101
It's not regulation per se is deficient, it is regulation under neoliberal regime, were government is captured by financial oligarchy ;-). But that understanding is foreign to WSJ with its neoliberal agenda :-(.
"... Impressionable journalists finally meet George Stigler. ..."
"... The secret recordings were made by Carmen Segarra, who went to work as an examiner at the New York Fed in 2011 but was fired less than seven months later in 2012. She has filed a wrongful termination lawsuit against the regulator and says Fed officials sought to bury her claim that Goldman had no firm-wide policy on conflicts-of-interest. Goldman says it has had such policies for years, though on the same day Ms. Segarra's revelations were broadcast, the firm added new restrictions on employees trading for their own accounts. ..."
"... On the recordings, regulators can be heard doing what regulators do-revealing the limits of their knowledge and demonstrating their reluctance to challenge the firms they regulate. At one point Fed officials suspect a Goldman deal with Banco Santander may have been "legal but shady" in the words of one regulator, and should have required Fed approval. But the regulators basically accept Goldman's explanations without a fight. ..."
"... The journalists have also found evidence in Ms. Segarra's recordings that even after the financial crisis and the supposed reforms of the Dodd-Frank law, the New York Fed remained a bureaucratic agency resistant to new ideas and hostile to strong-willed, independent-minded employees. In government? ..."
"... "as a rule, regulation is acquired by the industry and is designed and operated primarily for its benefit." ..."
"... Once one understands the inevitability of regulatory capture, the logical policy response is to enact simple laws that can't be gamed by the biggest firms and their captive bureaucrats. ..."
"... And it means considering economist Charles Calomiris's plan to automatically convert a portion of a bank's debt into equity if the bank's market value falls below a healthy level. ..."
Oct 05, 2014 | Casino Capitalism and Crapshoot PoliticsRegulatory Capture 101The financial scandal du jour involves leaked audio recordings that purport to show that regulators at the Federal Reserve Bank of New York were soft on Goldman Sachs . Say it ain't so.
Impressionable journalists finally meet George Stigler.
... ... ...
The secret recordings were made by Carmen Segarra, who went to work as an examiner at the New York Fed in 2011 but was fired less than seven months later in 2012. She has filed a wrongful termination lawsuit against the regulator and says Fed officials sought to bury her claim that Goldman had no firm-wide policy on conflicts-of-interest. Goldman says it has had such policies for years, though on the same day Ms. Segarra's revelations were broadcast, the firm added new restrictions on employees trading for their own accounts.
The New York Fed won against Ms. Segarra in district court, though the case is on appeal. The regulator also notes that Ms. Segarra "demanded $7 million to settle her complaint." And last week New York Fed President William Dudley said, "We are going to keep striving to improve, but I don't think anyone should question our motives or what we are trying to accomplish."
On the recordings, regulators can be heard doing what regulators do-revealing the limits of their knowledge and demonstrating their reluctance to challenge the firms they regulate. At one point Fed officials suspect a Goldman deal with Banco Santander may have been "legal but shady" in the words of one regulator, and should have required Fed approval. But the regulators basically accept Goldman's explanations without a fight.
The sleuths at the ProPublica website, working with a crack team of investigators from public radio, also seem to think they have another smoking gun in one of Ms. Segarra's conversations that was not recorded but was confirmed by another regulator. Ms. Seest means. For example, a company offering securities is exempt from some registration requirements if it is only selling to accredited investors, such as people with more than $1 million in net worth, excluding the value of primary residences.
The journalists have also found evidence in Ms. Segarra's recordings that even after the financial crisis and the supposed reforms of the Dodd-Frank law, the New York Fed remained a bureaucratic agency resistant to new ideas and hostile to strong-willed, independent-minded employees. In government?***
Enter George Stigler, who published his famous essay "The Theory of Economic Regulation" in the spring 1971 issue of the Bell Journal of Economics and Management Science. The University of Chicago economist reported empirical data from various markets and concluded that "as a rule, regulation is acquired by the industry and is designed and operated primarily for its benefit."
Stigler knew he was fighting an uphill battle trying to persuade his fellow academics. "The idealistic view of public regulation is deeply imbedded in professional economic thought," he wrote. But thanks to Stigler, who would go on to win a Nobel prize, many economists have studied the operation and effects of regulation and found similar results.
A classic example was the New York Fed's decision to let Citigroup stash $1.2 trillion of assets-including more than $600 billion of mortgage-related securities-in off-balance-sheet vehicles before the financial crisis. That's when Tim Geithner ran the New York Fed and Jack Lew was at Citigroup.
Once one understands the inevitability of regulatory capture, the logical policy response is to enact simple laws that can't be gamed by the biggest firms and their captive bureaucrats. This means repealing most of Dodd-Frank and the so-called Basel rules and replacing them with a simple requirement for more bank capital-an equity-to-asset ratio of perhaps 15%. It means bringing back bankruptcy for giant firms instead of resolution at the discretion of political appointees. And it means considering economist Charles Calomiris's plan to automatically convert a portion of a bank's debt into equity if the bank's market value falls below a healthy level.
[Dec 21, 2016] The widespread belief of neoliberals that they are entitled to a good hand in the market economy casino. This is reflected in the more or less universal belief of the affluent that
Krugman is a neoliberal stooge. Since when Social Security is an entitlement program. If you start contributing at 25 and retire at 67 (40 years of monthly contributions), you actually get less then you contribute, unless you live more then 80 years. It just protects you from "free market casino".
"... A "contribution" theory of what a proper distribution of income might be can only be made coherent if there are constant returns to scale in the scarce, priced, owned factors of production. Only then can you divide the pile of resources by giving to each the marginal societal product of their work and of the resources that they own. ..."
"... n a world--like the one we live in--of mammoth increasing returns to unowned knowledge and to networks, no individual and no community is especially valuable. Those who receive good livings are those who are lucky -- as Carrier's workers in Indiana have been lucky in living near Carrier's initial location. It's not that their contribution to society is large or that their luck is replicable: if it were, they would not care (much) about the departure of Carrier because there would be another productive network that they could fit into a slot in. ..."
"... If not about people, what is an economy about? ..."
"... I hadn't realized that Democrats now view Social Security and Medicare as "government handouts". ..."
"... Some Democrats like Krugman are Social Darwinists. ..."
"... PK is an ignorant vicious SOB. Many of those "dependent hillbillies" PK despises paid SS and Medicare taxes for many decades, most I know have never been on foos stamps, and if they are on disability it is because they did honest hard work, something PK knows nothing about. What an ignorant jerk. ..."
"... What is a very highly subsidized industry that benefits Delong and Krugman? Higher education. Damn welfare queens! :) ..."
"... No Krugman is echoing the tribalism of Johnny Bakho. These people won't move or educate themselves or "skill up" so they deserve what they get. Social darwinism. ..."
"... People like Bakho are probably anti-union as well. They're seen as relics of an earlier age and economically "uncompetitve." See Fred Dobbs below. That's the dog whistle about the "rust belt." ..."
"... Paul Krugman's reputation, formerly that of a a noted economic, succumbed after a brief struggle to Trump Derangement Syndrome. Friends said Mr Krugman's condition had been further aggravated by cognitive dissonance from a severely challenged worldview. ..."
"... He is survived by the New York Times, also said to be in failing health. ..."
"... For a long time DeLong was mocking the notion of "economic anxiety" amongst the voters. Does this blog post mean he's rethinking that idea? ..."
"... The GOP has a long history of benefitting from the disconnect where a lot of their voters are convinced that when government money goes to others (sometimes even within their own white congregations), then it is not deserved. ..."
Dec 21, 2016 | economistsview.typepad.com
anne : December 18, 2016 at 05:13 AM , 2016 at 05:13 AMhttp://krugman.blogs.nytimes.com/2016/12/17/what-do-trump-voters-want/anne -> anne... , December 18, 2016 at 05:18 AM
December 17, 2016
What Do Trump Voters Want?
By Paul Krugman
Brad DeLong has an interesting meditation * on markets and political demands - inspired by a note from Noah Smith ** - that offers food for thought. I wonder, however, if Brad's discussion is too abstract; and I also wonder whether it fully recognizes the disconnect between what Trump voters think they want and reality. So, an entry of my own.
What Brad is getting at is the widespread belief by, well, almost everyone that they are entitled to - have earned - whatever good hand they have been dealt by the market economy. This is reflected in the more or less universal belief of the affluent that they deserve what they have; you could see this in the rage of rentiers at low interest rates, because it's the Federal Reserve's job to reward savers, right? In this terrible political year, the story was in part one of people in Appalachia angrily demanding a return of the good jobs they used to have mining coal - even though the world doesn't want more coal given fracking, and it can get the coal it still wants from strip mines and mountaintop removal, which don't employ many people.
And what Brad is saying, I think, is that what those longing for the return to coal want is those jobs they deserve, where they earn their money - not government handouts, no sir.
A fact-constrained candidate wouldn't have been able to promise such people what they want; Trump, of course, had no problem.
But is that really all there is? Working-class Trump voters do, in fact, receive a lot of government handouts - they're almost totally dependent on Social Security for retirement, Medicare for health care when old, are quite dependent on food stamps, and many have recently received coverage from Obamacare. Quite a few receive disability payments too. They don't want those benefits to go away. But they managed to convince themselves (with a lot of help from Fox News etc) that they aren't really beneficiaries of government programs, or that they're not getting the "good welfare", which only goes to Those People.
And you can really see this in the regional patterns. California is an affluent state, a heavy net contributor to the federal budget; it went 2-1 Clinton. West Virginia is poor and a huge net recipient of federal aid; it went 2 1/2-1 Trump.
I don't think any kind of economic analysis can explain this. It has to be about culture and, as always, race.
** https://www.bloomberg.com/view/articles/2016-12-16/four-ways-to-help-the-midwesthttp://www.bradford-delong.com/2016/12/is-the-problem-one-of-insufficient-market-wages-inadequate-social-insurance-polanyian-disruption-of-patterns-of-life-.htmlken melvin -> anne... , December 18, 2016 at 05:32 AM
December 17, 2016
Regional Policy and Distributional Policy in a World Where People Want to Ignore the Value and Contribution of Knowledge- and Network-Based Increasing Returns
Pascal Lamy: "When the wise man points at the moon, the fool looks at the finger..."
Perhaps in the end the problem is that people want to pretend that they are filling a valuable role in the societal division of labor, and are receiving no more than they earn--than they contribute.
But that is not the case. The value--the societal dividend--is in the accumulated knowledge of humanity and in the painfully constructed networks that make up our value chains.
A "contribution" theory of what a proper distribution of income might be can only be made coherent if there are constant returns to scale in the scarce, priced, owned factors of production. Only then can you divide the pile of resources by giving to each the marginal societal product of their work and of the resources that they own.
That, however, is not the world we live in.
In a world--like the one we live in--of mammoth increasing returns to unowned knowledge and to networks, no individual and no community is especially valuable. Those who receive good livings are those who are lucky -- as Carrier's workers in Indiana have been lucky in living near Carrier's initial location. It's not that their contribution to society is large or that their luck is replicable: if it were, they would not care (much) about the departure of Carrier because there would be another productive network that they could fit into a slot in.
All of this "what you deserve" language is tied up with some vague idea that you deserve what you contribute--that what your work adds to the pool of society's resources is what you deserve.
This illusion is punctured by any recognition that there is a large societal dividend to be distributed, and that the government can distribute it by supplementing (inadequate) market wages determined by your (low) societal marginal product, or by explicitly providing income support or services unconnected with work via social insurance. Instead, the government is supposed to, somehow, via clever redistribution, rearrange the pattern of market power in the economy so that the increasing-returns knowledge- and network-based societal dividend is predistributed in a relatively egalitarian way so that everybody can pretend that their income is just "to each according to his work", and that they are not heirs and heiresses coupon clipping off of the societal capital of our predecessors' accumulated knowledge and networks.
On top of this we add: Polanyian disruption of patterns of life--local communities, income levels, industrial specialization--that you believed you had a right to obtain or maintain, and a right to believe that you deserve. But in a market capitalist society, nobody has a right to the preservation of their local communities, to their income levels, or to an occupation in their industrial specialization. In a market capitalist society, those survive only if they pass a market profitability test. And so the only rights that matter are those property rights that at the moment carry with them market power--the combination of the (almost inevitably low) marginal societal products of your skills and the resources you own, plus the (sometimes high) market power that those resources grant to you.
This wish to believe that you are not a moocher is what keeps people from seeing issues of distribution and allocation clearly--and generates hostility to social insurance and to wage supplement policies, for they rip the veil off of the idea that you deserve to be highly paid because you are worth it. You aren't.
And this ties itself up with regional issues: regional decline can come very quickly whenever a region finds that its key industries have, for whatever reason, lost the market power that diverted its previously substantial share of the knowledge- and network-based societal dividend into the coffers of its firms. The resources cannot be simply redeployed in other industries unless those two have market power to control the direction of a share of the knowledge- and network-based societal dividend. And so communities decline and die. And the social contract--which was supposed to have given you a right to a healthy community--is broken.
As I have said before, humans are, at a very deep and basic level, gift-exchange animals. We create and reinforce our social bonds by establishing patterns of "owing" other people and by "being owed". We want to enter into reciprocal gift-exchange relationships. We create and reinforce social bonds by giving each other presents. We like to give. We like to receive. We like neither to feel like cheaters nor to feel cheated. We like, instead, to feel embedded in networks of mutual reciprocal obligation. We don't like being too much on the downside of the gift exchange: to have received much more than we have given in return makes us feel very small. We don't like being too much on the upside of the gift exchange either: to give and give and give and never receive makes us feel like suckers.
We want to be neither cheaters nor saps....If not about people, what is an economy about?Observer -> anne... , December 18, 2016 at 05:59 AMI hadn't realized that Democrats now view Social Security and Medicare as "government handouts".Peter K. -> Observer... , December 18, 2016 at 09:25 AMSome Democrats like Krugman are Social Darwinists. They're the "center-left" versus Bernie Sanders's leftwing supporters.Tom aka Rusty -> anne... , December 18, 2016 at 06:06 AMPK is an ignorant vicious SOB. Many of those "dependent hillbillies" PK despises paid SS and Medicare taxes for many decades, most I know have never been on foos stamps, and if they are on disability it is because they did honest hard work, something PK knows nothing about. What an ignorant jerk.Tom aka Rusty -> Tom aka Rusty... , December 18, 2016 at 06:31 AMWhat is a very highly subsidized industry that benefits Delong and Krugman? Higher education. Damn welfare queens! :)RC AKA Darryl, Ron -> Tom aka Rusty... , December 18, 2016 at 06:37 AMNot LOL worthy, but still a good solid :<)anne -> Tom aka Rusty... , December 18, 2016 at 06:53 AMEMichael -> Tom aka Rusty... , December 18, 2016 at 07:18 AM
Education from elementary through college and professional levels is of course publicly supported in every reasonably advanced country in the world.What is a very highly subsidized industry that benefits Rusty?Peter K. -> EMichael... , December 18, 2016 at 09:33 AM
Damn welfare queen!Or Krugman's textbook industry.BenIsNotYoda -> Tom aka Rusty... , December 18, 2016 at 10:49 AMPK's rhetoric, together with shills like pgl and emichael, has deteriorated quite a bit. Nicely done Rusty.anne -> Tom aka Rusty... , December 18, 2016 at 06:34 AM"dependent hillbillies"pgl -> anne... , December 18, 2016 at 09:34 AM
[ This is a false quote. A writer should never be falsely quoted. There is no such expression used in this or any other essay by Paul Krugman. ]It must be really cold where Rusty lives and he woke up in one foul mood.DeDude -> Tom aka Rusty... , December 18, 2016 at 08:58 AMExactly the same could be said about many of those inner city minorities that the "dependent hillbillies" look down on as "welfare queens". That may be one of the reasons they take special issues with "food stamps", because in contrast to the hillbillies, inner city poor people cannot grow their own food. What Krugman is pointing out is the hypocrisy of their tribalism - and also the idiocy, because the dismantling of society would ultimately hurt the morons that voted GOP into power this round.Peter K. -> DeDude... , December 18, 2016 at 09:31 AM"What Krugman is pointing out is the hypocrisy of their tribalism "Peter K. -> Peter K.... , December 18, 2016 at 09:58 AM
No Krugman is echoing the tribalism of Johnny Bakho. These people won't move or educate themselves or "skill up" so they deserve what they get. Social darwinism.People like Bakho are probably anti-union as well. They're seen as relics of an earlier age and economically "uncompetitve." See Fred Dobbs below. That's the dog whistle about the "rust belt."Julio -> Tom aka Rusty... , December 18, 2016 at 10:53 AMHis tone is supercilious and offensive. But your argument is that they are not "dependent" because they earned every benefit they get from the government. I think his point is that "dependent" is not offensive -- the term jus reflects how we all depend on government services. DeLong makes the point much better in the article quoted by anne above.Observer -> anne... , December 18, 2016 at 06:07 AMIn MemoriumRC AKA Darryl, Ron -> Observer... , December 18, 2016 at 06:38 AM
Paul Krugman's reputation, formerly that of a a noted economic, succumbed after a brief struggle to Trump Derangement Syndrome. Friends said Mr Krugman's condition had been further aggravated by cognitive dissonance from a severely challenged worldview.
He is survived by the New York Times, also said to be in failing health.
:<)kthomas -> anne... , December 18, 2016 at 06:52 AMJudith Miller. Dowd. Doh!at. Broder. Brooks.anne -> anne... , December 18, 2016 at 06:55 AM
BSThe New York Times is easily the finest newspaper in the world, is broadly recognized as such and is of course flourishing. Such an institution will always have sections or editors and writers of relative strength but these relative strengths change over time as the newspaper continually changes.Observer -> anne... , December 18, 2016 at 07:36 AMFlourishing?anne -> Dan Kervick... , December 18, 2016 at 07:17 AM
NYT Co. to revamp HQ, vacate eight floors in consolidation
"In an SEC filing, New York Times Co. discloses a staff communication it provided today to employees about a revamp of its headquarters -- including consolidating floors.
The company will vacate at least eight floors, consolidating workspaces and allowing for "significant" rental income, the memo says."
http://seekingalpha.com/news/3231232-nyt-co-revamp-hq-vacate-eight-floors-consolidationBrad DeLong's piece was thoughtful.Peter K. -> Dan Kervick... , December 18, 2016 at 09:30 AM
[ Importantly so, worth a couple of close readings. ]For a long time DeLong was mocking the notion of "economic anxiety" amongst the voters. Does this blog post mean he's rethinking that idea?Peter K. -> Peter K.... , December 18, 2016 at 09:57 AM
Technocratic Democrats like DeLong and Krugman (or neoliberal centrists) are notoriously against economic democracy and unions and the like.Dan Kervick -> Peter K.... , December 18, 2016 at 01:13 PM
Maybe that's a factor here.I think he and others have finally reached a point where denial is not an option.DeDude -> anne... , December 18, 2016 at 08:37 AMThe GOP has a long history of benefitting from the disconnect where a lot of their voters are convinced that when government money goes to others (sometimes even within their own white congregations), then it is not deserved. But if that same government money goes to themselves (or their real close relatives), then it is a hard earned and well-deserved payback for their sacrifices and tax payments. So the GOP leadership has always called it "saving social security" and "cracking down on fraud" rather than admitting to their attempts to dismantle those programs. The Dems better be on the ball and call it what it is. If you want to save those programs you just have to prevent rich people from wiggling out of paying for them (don't repeal the Obamacare medicare taxes on the rich).rjs -> anne... , December 18, 2016 at 10:12 AMWhat Do Trump Voters Want? for starters, they'd probably want people like Krugman to stop looking down their noses at them like they're lepers..DeDude -> rjs ... , December 18, 2016 at 01:49 PMCan we at least call those with the pointy white hats, despicable?rjs -> DeDude... , December 18, 2016 at 02:29 PMDeDude -> rjs ... , December 18, 2016 at 03:45 PM
depends on how many of those people who voted for Obama in 2012 you figure to have joined the pointy white hat club since...
http://peakwatch.typepad.com/.a/6a00d83452403c69e201bb0960723f970d-piWould they not be despicable regardless of what kind of wood they previously enjoyed burning?RC AKA Darryl, Ron : , December 18, 2016 at 06:15 AMExcellent post election commentary from Bloom County (comic).David : , December 18, 2016 at 07:16 AM
http://www.gocomics.com/bloom-county/2016/11/27On the Pk piece. I think it is really about human dignity, and the need for it. There were a lot of factors in this horrific election, but just as urban blacks need to be spared police brutality, rural whites need a dignified path in their lives. Everyone, united, deserves such a path.EMichael -> David... , December 18, 2016 at 07:36 AM
This is a real challenge for economists; how do we rebuild the rust belt (which applies to areas beyond the literal rust belt).
If we do not, we risk Trump 2.0, which could be very scary indeed.I agree to a point, but what the piece is about is that in search of a solution to the problems of the rustbelt (whatever the definition is),people voted for Trump who had absolutely no plan to solve such a problem, other than going back to the future and redoing Nafta and getting rid of regulations.Peter K. -> EMichael... , December 18, 2016 at 08:48 AM
Meanwhile, that vote also meant that the safety net that helps all Americans in trouble was being placed in severe risk.
Those voters were fixed on his rhetoric and right arm extended while his left hand was grabbing them by the (in deference to Anne I will not say the words, but Trump himself has said one of them and the other is the male version)."I agree to a point,"sglover -> EMichael... , December 18, 2016 at 06:08 PM
Really? You didn't seem to before. You'd say what Duy or Noah Smith or DeLong were mulling about was off-limits. You'd ban them from the comment section if you could. "This is a real challenge for economists; how do we rebuild the rust belt (which applies to areas beyond the literal rust belt).
If we do not, we risk Trump 2.0, which could be very scary indeed." I don't see why this is such a controversial point for centrist like Krugman. How do we appeal to the white working class without contradicting our principles?
By promoting policies that raise living standards. By delivering, which mean left-wing policies not centrist tinkering. It's the Clinton vs. Sanders primary. Hillary could have nominated Elizabeth Warren as her VP candidate but her corporate masters wouldn't let her."Meanwhile, that vote also meant that the safety net that helps all Americans in trouble was being placed in severe risk."Fred C. Dobbs -> David... , December 18, 2016 at 08:07 AM
That safety net is an improvement over 1930. But it's been fraying so badly over the last 20-30 years that it's almost lost all meaning. It's something people turn to before total destitution, but for rebuilding a life? A sick joke, filled with petty hassles and frustrations.
And the fraying has been a solidly bipartisan project. Who can forget welfare "reform"?
So maybe the yokels you're blaming for the 10,000-th time might not buy your logic or your intentions.In the rustbelt, Dems are accustomed toPeter K. -> Fred C. Dobbs... , December 18, 2016 at 08:49 AM
dealing with their supporters who are
union members. (Why the auto industry
was bailed out, dontchaknow.)
That obviously doesn't work so well
any more. In that region, recovery
was 'less than robust', no?
In New England, where unions are much
less of a factor, recovery has been
relatively successful. Dems remain
pretty strong here.
Why can't the rustbelt be more
like the northeast?
The ongoing new industrial revolution
would seem to have much to do
with such matters."In New England, where unions are much less of a factor, recovery has been relatively successful. Dems remain pretty strong here."Fred C. Dobbs -> Peter K.... , December 18, 2016 at 09:30 AM
Is that accurate?unions don't have much to celebrate (in MA) http://www.bostonglobe.com/metro/2014/08/29/labor-day-but-there-little-for-labor-celebrate/e4MOhMsc5lf6rJkZdCPbKM/story.html?event=event25Fred C. Dobbs -> Peter K.... , December 18, 2016 at 09:44 AM
via @BostonGlobe - August 2014
... At the height of their influence in the 1950s, labor unions could claim to represent about 1 of every 3 American workers. Today, it's 1 in 9 - and falling.
Some have seen the shrinking size and waning influence of labor unions as a sign that the US economy is growing more flexible and dynamic, but there's mounting evidence that it is also contributing to slow wage growth and the rise in inequality. ...
(Union membership) NY 24.7%, MA 12.4%, SC 2.1%
... Are unions faring any better here in Massachusetts?
While Massachusetts's unions are stronger than average, it's not among the most heavily unionized states. That honor goes to New York, where 1 in every 4 workers belongs to a union. After New York, there are 11 other states with higher union membership rates then Massachusetts.
Here too, though, the decline in union membership over time has been steep.
(From 1983 to 2013) US -42%, MA -44%
Union Members Summary - BLS - Jan 2016 https://www.bls.gov/news.release/union2.nr0.htmPeter K. -> Fred C. Dobbs... , December 18, 2016 at 09:56 AM
... In 2015, 30 states and the District of Columbia had union membership rates below
that of the U.S. average, 11.1 percent, and 20 states had rates above it. All states
in the East South Central and West South Central divisions had union membership rates
below the national average, and all states in the Middle Atlantic and Pacific divisions
had rates above it. Union membership rates increased over the year in 24 states and
the District of Columbia, declined in 23 states, and were unchanged in 3 states.
(See table 5.)
Five states had union membership rates below 5.0 percent in 2015: South Carolina
(2.1 percent), North Carolina (3.0 percent), Utah (3.9 percent), Georgia (4.0 percent),
and Texas (4.5 percent).
Two states had union membership rates over 20.0 percent in
2015: New York (24.7 percent) and Hawaii (20.4 percent).
State union membership levels depend on both the employment level and the union
membership rate. The largest numbers of union members lived in California (2.5 million)
and New York (2.0 million).
Roughly half of the 14.8 million union members in the
U.S. lived in just seven states (California, 2.5 million; New York, 2.0 million;
Illinois, 0.8 million; Pennsylvania, 0.7 million; and Michigan, Ohio, and New Jersey,
0.6 million each), though these states accounted for only about one-third of wage and
salary employment nationally.
(It appears that New England union participation
lags in the northeast, and also in the rest of
the US not in the Red Zone.)
Table 5. Union affiliation of employed wage and salary workers by state https://www.bls.gov/news.release/union2.t05.htm
"In New England, where unions are muchFred C. Dobbs -> Peter K.... , December 18, 2016 at 10:12 AM
less of a factor, recovery has been
relatively successful. Dems remain
pretty strong here."
I'm questionning the causation. B/c New England has fewer unions, they're doing better?
My bet is that most of these centrists like Krugman don't like unions and think they're ancient relics which hurt the economies "competitiveness."
I have noted before that New EnglandFred C. Dobbs -> Peter K.... , December 18, 2016 at 10:21 AM
is doing better 'than average' (IMO)
because of high-tech industry & education.
Not necessarily because of a lack of
unionization, which is prevalent here
in public education & among service
workers. Note that in higher ed,
much here is private.
Private industry here traditionally
is not heavily unionized, although
that is probably not the case
among defense corps.As to causation, I think theFred C. Dobbs -> Fred C. Dobbs... , December 18, 2016 at 10:24 AM
implication is that 'Dems dealing
with unions' has not been working
all that well, recovery-wise,
particularly in the rust belt.
That must have as much to do with
industrial management as it does
with labor, and the ubiquitous
on-going industrial revolution.It may well be that in thesglover -> Fred C. Dobbs... , December 18, 2016 at 06:10 PM
rust belt, corps are doing
reasonably well, but not as
much with labor. That is an
industrial revolution problem."In the rustbelt, Dems are accustomed to dealing with their supporters who are union members. (Why the auto industry was bailed out, dontchaknow.)"DeDude -> David... , December 18, 2016 at 09:35 AM
Uh huh. Sure.
Know how many times HRC visited UAW groups during her "campaign" in Michigan?
Those autoworkers are real ingrates.Everybody needs, and desperately crave, self-confidence and dignity. In white rural culture that has always been connected to the old settler mentality and values of personal "freedom" and "independence". It is unfortunate that this freedom/independence mythology has been what attracted all the immigrants from Europe over here. So it is as strongly engrained (both in culture and individual values) as it is outdated and counterproductive in the world of the future. I am not sure that society can help a community where people find themselves humiliated by being helped (especially by bad government). Maybe somehow try to get them to think of the government help as an earned benefit?Fred C. Dobbs -> DeDude... , December 18, 2016 at 10:22 AMOk, that seems very quaint.
[Dec 21, 2016] The essence of voting the lesser of two evils: To comfortable centrists like pgl, the Democrats should be graded on a curve. As long as theyre better than the awful Republicans, then theyre good enough and beyond criticism.
"... The essence of voting the lesser of two evils: "To comfortable centrists like pgl, the Democrats should be graded on a curve. As long as they're better than the awful Republicans, then they're good enough and beyond criticism." ..."
"... These Wall Street Democrats can rest assured that Democrats will surely get their turn in power in 4-8 years...after Trump thoroughly screws things up. And then Democrats will proceed to screw things up themselves...as we learned from Obama and Hillary's love of austerity and total disinterest in the economic welfare of the vast majority. ..."
"... In case you didn't notice, Democrats did nothing about the minimum wage 2009-2010. ..."
"... Many Democratic candidates won't even endorse minimum wage increase in states where increases win via initiative. They preferred to lose elections to standing up for minimum wage increases. ..."
Dec 20, 2016 | economistsview.typepad.comDecember 20, 2016 at 07:59 AMJohnH -> jonny bakho... , December 20, 2016 at 12:39 PM
Peter K.... The essence of voting the lesser of two evils: "To comfortable centrists like pgl, the Democrats should be graded on a curve. As long as they're better than the awful Republicans, then they're good enough and beyond criticism."
These Wall Street Democrats can rest assured that Democrats will surely get their turn in power in 4-8 years...after Trump thoroughly screws things up. And then Democrats will proceed to screw things up themselves...as we learned from Obama and Hillary's love of austerity and total disinterest in the economic welfare of the vast majority.
To pgl and his ilk, Obama was great as long as he said the right things...regardless of what he actually did. Hillary didn't even have to say the right things...she only had to be a Wall Street Democrat for pgl to be enthusiastic about her.In case you didn't notice, Democrats did nothing about the minimum wage 2009-2010. At a minimum, they could have taken their dominance then to enact increases for 2010-2016 or to index increases to inflation. Instead, Pelosi, Reid and Obama preferred to do nothing.
Many Democratic candidates won't even endorse minimum wage increase in states where increases win via initiative. They preferred to lose elections to standing up for minimum wage increases.
[Dec 21, 2016] The reason Trump won the GOP nomination was exactly because he claimed to reject traditional GOP policies and approaches
"... At some point the GOP has to decide how much of Trump's populist agenda they can stuff in the toilet without inducing an uncontrollable backlash. ..."
"... The reason Trump won the GOP nomination was exactly because he claimed to reject traditional GOP policies and approaches. ..."
"... If the GOP just go ahead with a traditional "rule for the rich" policy (because they won) there could be serious fireworks ahead - provided the Dems can pull out a populist alternative policy by the the next election. ..."
"... I have no idea what's going to happen, but my guess is that Trump and the Republicans are going to completely sell out the "Trump voters." ..."
"... But they still tried to push through Social Security privatization even though everyone is against it. ..."
"... If recent history is any guide, incumbents get a second term regardless of how bad the economy is. Clinton, Bush, and Obama were all reelected despite a lousy economy. The only exception in recent memory was Bush 41. ..."
"... Upper class tax cuts were central to his policies. Anybody who believed he was anything other than an standard issue Republican would buy shares in Arizona swampland. ..."
"... trump did indeed state that he would give bigger tax cuts to the rich, repeatedly. the genius of trump's performance is that by never having a clear position his gullible followers were able to fill in the gaps using their own hopes and desires. ..."
"... That is correct, but also the weakness in his support. They will almost certainly be disappointed as the exact interpretations and choices between incompatible promises turns out to be different from the individuals hopes and desires. ..."
"... And consider how dysfunction from laissez faire healthcare policy readoption leads to rising prices/costs above current trend to limit disposable income even more, it will be amazing if we do not have stagnation and worse for the bulk of society. ..."
"... Bush implemented and expanded a community health clinic system, that reallnwoukd be a nice infrastructure play for the US, but this Congress is more likely to disinvest here. They certainly don't want these do-gooder nonprofits competing against the doctor establishment. ..."
"... The question is first of all whether Trump can bully the Fed away from their current and traditional course (which would not allow much of a stimulus, before they cancelled it out with rate hikes). ..."
"... Second whether the Fed itself having been traditionally prone to support GOP presidents (see inconsistencies in Greenspan's policies during Clinton vs. Bush) will change its policies and allow higher inflation and wage growth than they have under any Dem president. ..."
"... The little people go to the credit channels to help finance the purchase of durables and higher education too. The Fed's actions themselves will see these credit prices ratchet, so nit good fir basic demand. Veblen goods will see more price rises as the buyers will have lots of rentier/lobbying gathered money to burn. ..."
Dec 21, 2016 | economistsview.typepad.comDeDude -> jonny bakho... December 20, 2016 at 07:40 AMAt some point the GOP has to decide how much of Trump's populist agenda they can stuff in the toilet without inducing an uncontrollable backlash.
The reason Trump won the GOP nomination was exactly because he claimed to reject traditional GOP policies and approaches. It was the old tea-partiers insisting that their anti-rich/Anti-Wall street sentiments be inserted into the GOP.
If the GOP just go ahead with a traditional "rule for the rich" policy (because they won) there could be serious fireworks ahead - provided the Dems can pull out a populist alternative policy by the the next election.
Peter K. -> DeDude... , December 20, 2016 at 07:56 AMhey, a good comment!JohnH -> DeDude... , December 20, 2016 at 08:04 AM
I have no idea what's going to happen, but my guess is that Trump and the Republicans are going to completely sell out the "Trump voters."
George W. Bush wasn't completely horrible (besides Iraq, John Roberts, tax cuts for the rich, the Patriot act and the surveillance state, Katrina, etc. etc. etc.). He was good on immigration, world AIDS prevention, expensive Medicare drug expansion, etc.
But they still tried to push through Social Security privatization even though everyone is against it.
To some extent Bush demoralized the Republican base and they didn't turn out in 2008.If recent history is any guide, incumbents get a second term regardless of how bad the economy is. Clinton, Bush, and Obama were all reelected despite a lousy economy. The only exception in recent memory was Bush 41.DrDick -> DeDude... , December 20, 2016 at 08:18 AM
About the only thing that can derail Trump is a big recession in 2019."The reason Trump won the GOP nomination was exactly because he claimed to reject traditional GOP policies and approaches."DeDude -> DrDick... , December 20, 2016 at 08:35 AM
While generally enthusiastically embracing them. Upper class tax cuts were central to his policies. Anybody who believed he was anything other than an standard issue Republican would buy shares in Arizona swampland.He never came out directly saying or tweeting that he would give bigger tax cuts to the rich than anybody else - he said he would give bigger tax cuts. It is true that people with a college education had an easy time figuring him out even before the election. But the populist messages he campaigned on were anti-establishment including suggesting that the "hedge-fund guys" were making a killing by being taxed at a lower rate.yuan -> DeDude... , December 20, 2016 at 10:00 AMtrump did indeed state that he would give bigger tax cuts to the rich, repeatedly. the genius of trump's performance is that by never having a clear position his gullible followers were able to fill in the gaps using their own hopes and desires.DeDude -> yuan... , December 20, 2016 at 11:19 AMyuan -> DeDude... , December 20, 2016 at 11:36 AM"his gullible followers were able to fill in the gaps using their own hopes and desires"
That is correct, but also the weakness in his support. They will almost certainly be disappointed as the exact interpretations and choices between incompatible promises turns out to be different from the individuals hopes and desires. The reason Trump was able to beat even a Tea party darling, was the backlash against big money having taken over the Tea party. The backlash against Trump_vs_deep_state being "taken over by big money" interest will be interesting to observe, especially if the Dems find the right way to play it.i hope you are right! however, history shows that a political movement can remain irrational longer than your government can remain democratic.DrDick -> jonny bakho... , December 20, 2016 at 08:14 AMAnd that is the least of the damage they will inflict.New Deal democrat said in reply to pgl... , December 20, 2016 at 05:10 AMFollowing up on Johnny Bakho's comment below, let's assume that average wage growth YoY for nonsupervisory workers never reaches 3% before the next recession hits. Wage growth rates always decline in recessions, usually by over 2%.pgl -> New Deal democrat... , December 20, 2016 at 06:04 AM
If in the next recession, we see actual slight nominal wage decreases, is a debt-deflationary wage-price spiral inevitable? Or could there be a small decline of less than -1% without triggering such a spiral.
Got any opinion? Is there any research on this?"is a debt-deflationary wage-price spiral inevitable?"New Deal democrat said in reply to pgl... , December 20, 2016 at 06:28 AM
Good question. It all depends on the response of policy makers. If we continue with the stupid fiscal austerity that began in 2011, it may be inevitable. Which is why doing public infrastructure investment is a very good idea.We're doomed.DrDick -> New Deal democrat... , December 20, 2016 at 08:19 AMI knew that immediately after the election.JF -> DrDick... , December 20, 2016 at 01:07 PMAnd consider how dysfunction from laissez faire healthcare policy readoption leads to rising prices/costs above current trend to limit disposable income even more, it will be amazing if we do not have stagnation and worse for the bulk of society.Peter K. -> pgl... , December 20, 2016 at 07:08 AM"Which is why doing public infrastructure investment is a very good idea."JF -> Peter K.... , December 20, 2016 at 01:10 PM
If Hillary Clinton was so progressive according to people like you and Krugman, then why was her infrastructure plan so meager?
Alan Blinder said it would be small small that it wouldn't effect the Fed's thinking on its rate hike schedule.Bush implemented and expanded a community health clinic system, that reallnwoukd be a nice infrastructure play for the US, but this Congress is more likely to disinvest here. They certainly don't want these do-gooder nonprofits competing against the doctor establishment.ilsm -> Peter K.... , December 20, 2016 at 03:52 PMEMike said it about Bernie..... no soup for you!DeDude -> pgl... , December 20, 2016 at 07:49 AM
For Clinton dems, the ones the wiki revealed are con artists, doing for the peeps [like Bernie stood for] is too far ideologically for the faux centrists.
They are neoliberals market monetarists who keep the bankers green and everyone else takes the back seats.At this point in time pretty much anything the policy makers do will be countered by the Fed. The question is first of all whether Trump can bully the Fed away from their current and traditional course (which would not allow much of a stimulus, before they cancelled it out with rate hikes).pgl -> DeDude... , December 20, 2016 at 07:55 AM
Second whether the Fed itself having been traditionally prone to support GOP presidents (see inconsistencies in Greenspan's policies during Clinton vs. Bush) will change its policies and allow higher inflation and wage growth than they have under any Dem president.As long as the FED thinks the natural rate of the employment to population ratio is only 60% - you'd be right. But then the FED is not thinking clearly.yuan -> Peter K.... , December 20, 2016 at 10:59 AMlike many of my fellow socialists, i fulminated about bernanke's coddling of banks and asset holders. i was somewhat wrong. bernanke was a evidently a strong voice for banking regulation and an end to the moral hazard of TBTF. it is a pity that obama did not listen to him.JF -> yuan... , -1
https://www.brookings.edu/blog/ben-bernanke/2016/05/13/ending-too-big-to-fail-whats-the-right-approach/The little people go to the credit channels to help finance the purchase of durables and higher education too. The Fed's actions themselves will see these credit prices ratchet, so nit good fir basic demand. Veblen goods will see more price rises as the buyers will have lots of rentier/lobbying gathered money to burn.
Will the Fed use rulemaking to control bubbling in the financial asset marketplaces as they wont want to rause rates too much. I hope they are paying attention
[Dec 21, 2016] Jeb Hensarling and the Allure of Economism
"... I always laugh when Newt Gingrich says we need "rational regulation". His crew has as its prime agenda getting rid of any regulation that is actually rational. ..."
"... the greater the information asymmetry, the easier it is to loot. ..."
"... Gramm pushed the next round of stupid deregulation which led to the latest crisis. And it seems Team Trump is about to relive the same mistake. Studying overly simplified models that have historically failed us over and over is the height of stupidity. ..."
Dec 19, 2016 | economistsview.typepad.comJames Kwak:
Jeb Hensarling and the Allure of Economism : The Wall Street Journal has a profile up on Mike Crapo and Jeb Hensarling, the key committee chairs (likely in Crapo's case) who will repeal or rewrite the Dodd-Frank Wall Street Reform and Consumer Protection Act. It's clear that both are planning to roll back or dilute many of the provisions of Dodd-Frank, particularly those that protect consumers from toxic financial products and those that impose restrictions on banks (which, together, make up most of the act).
Hensarling is about as clear a proponent of economism -the belief that the world operates exactly as described in Economics 101 models-as you're likely to find. He majored in economics at Texas A&M, where one of his professors was none other than Phil Gramm. Hensarling described his college exposure to economics this way :
"Even though I had grown up as a Republican, I didn't know why I was a Republican until I studied economics. I suddenly saw how free-market economics provided the maximum good to the maximum number, and I became convinced that if I had an opportunity, I'd like to serve in public office and further the cause of the free market."
This is not a unique story...
Introductory economics, and particularly the competitive market model, can be seductive that way. The models are so simple, logical, and compelling that they seem to unlock a whole new way of seeing the world. And, arguably, they do: there are real insights you can gain from a working understanding of supply and demand curves.
The problem, however, is that the people ... forget that the power of a theory in the abstract bears no relationship to its accuracy in practice. ...
Hensarling, who likes to quote market principles in the abstract, doesn't appear to have moved on much from Economics 101. ... This ritual invocation of markets ignores the fact that there is no way to design a contemporary financial system that even remotely resembles the textbook competitive market: perfect information, no barriers to entry, a large number of suppliers such that no supplier can affect the market price, etc. ...
Regulatory policy that presumes well-functioning markets that don't exist is unlikely to work well in the real world. Actually, Bill Clinton and George W. Bush tried that already, and we got the financial crisis. But to people who believe in economism, theory can never be disproved by experience. Hensarling is "always willing to compromise policies to advance principles," he actually said to the Journal . That's a useful trait in an ideologue. It's frightening in the man who will write the rules for our financial system.
yuan : , December 20, 2016 at 11:17 AMso...what kind of bubble will cutting onerous government regulations blow this time?pgl -> yuan... , December 20, 2016 at 11:20 AMI always laugh when Newt Gingrich says we need "rational regulation". His crew has as its prime agenda getting rid of any regulation that is actually rational.yuan -> pgl... , December 20, 2016 at 11:24 AMthe greater the information asymmetry, the easier it is to loot.pgl -> yuan... , December 20, 2016 at 01:25 PMExactly right and a key point.Tom aka Rusty -> pgl... , December 21, 2016 at 08:18 AMLike the 521 page explanation of the new overtime rules?mulp -> Tom aka Rusty... , December 21, 2016 at 12:18 PMThat is required to cover all the common law complexities from civil suits on labor issues being legislated from the Federal bench.pgl : , December 20, 2016 at 11:18 AM
Businesses have resorted to getting judges to legislate their way once their lobbying failed to get Congress to legalize slavery by other names.
Labor is a part of econ 101 that businesses do not understand.
Businesses see labor as black holes sucking all the money it can out of the economy. Consumers, on the other hand, are infinite sources of spending as long as government does not require consumers repay debts. But government does need to put more money in consumer pockets with more and bigger tax cuts.
When I learned econ 1 in secondary school social studies, the money spent at businesses came 100% from wages businesses paid.
A more advanced concept was economic profits were bad because that meant monopoly power restricting supply to consumers to take too much of their money and also pay them less than in an efficient economy.yuan -> pgl... , December 20, 2016 at 11:23 AM"Hensarling is about as clear a proponent of economism -- the belief that the world operates exactly as described in Economics 101 models-as you're likely to find. He majored in economics at Texas A&M, where one of his professors was none other than Phil Gramm."
Gramm never really got the economics of financial institutions. Milton Friedman did as he studies their failures during the Great Depression. We sort of relived this during the 1980's S&L crisis but on a smaller scale. That crisis was driven by ill advised financial deregulation.
Gramm pushed the next round of stupid deregulation which led to the latest crisis. And it seems Team Trump is about to relive the same mistake. Studying overly simplified models that have historically failed us over and over is the height of stupidity.https://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_ActPeter K. -> yuan... , December 20, 2016 at 01:24 PM
"The GrammLeachBliley Act (GLBA), also known as the Financial Services Modernization Act of 1999, (Pub.L. 106102, 113 Stat. 1338, enacted November 12, 1999) is an act of the 106th United States Congress (19992001). It repealed part of the GlassSteagall Act of 1933, removing barriers in the market among banking companies, securities companies and insurance companies that prohibited any one institution from acting as any combination of an investment bank, a commercial bank, and an insurance company. With the bipartisan passage of the GrammLeachBliley Act, commercial banks, investment banks, securities firms, and insurance companies were allowed to consolidate. Furthermore, it failed to give to the SEC or any other financial regulatory agency the authority to regulate large investment bank holding companies. The legislation was signed into law by President Bill Clinton."" The legislation was signed into law by President Bill Clinton."Daniel Brockman -> Peter K.... , December 21, 2016 at 11:38 AM
Who was his adviser? Larry Summers.
pgl calls them "progressive."How is it relevant that pgl called (or may have called) Larry Summers and Bill Clinton "progressive"? It's not relevant. Peter K. argues ad hominem.pgl -> yuan... , December 20, 2016 at 01:29 PMSome pest who knows nothing decided to slam Lawrence Summers. Here is something he co-authored with Natasha Sarin which relates to this issue:yuan -> pgl... , December 20, 2016 at 02:03 PM
It is an excellent discussion which you might enjoy. That know nothing will not read it as actual analysis only gets him angry.a good read but i disagree with their suggested approach:pgl -> yuan... , December 20, 2016 at 02:57 PM
"Consideration needs to be given to approaches such as those suggested by Bulow and Klemperer (2015) and
King (2016) that give more weight to market prices as indicators of asset values and that bring automaticity to the restoration of bank capital when it starts to decline."
imo, small enough to fail institutions pose less system risk and are less likely to speculate.I suspect over time we will disagree slightly here and there on specifics but it is a joy to have someone here that gets down to real analysis.anne -> pgl... , December 20, 2016 at 03:09 PM
In my view Sarin-Summers took too tiny a step into something fundamental but often overlooked. The return to equity is a mix of the equity/asset ratio (which needs to go up) aka leverage risk and the issue of operational risk which you are hinting at.
I bet Anne will demand more on what I'm saying here. Tiem to think about how best to present this over at Econospeak as this is a really big deal. Even if it is something Trump's new CEA (Lawrence Kudlow) does not get. Neither does PeterK so maybe he can work for Kudlow - the stupidest man alive (almost).The return to equity is a mix of the equity/asset ratio (which needs to go up) aka leverage risk and the issue of operational risk...Sanjait -> yuan... , December 20, 2016 at 09:48 PM
[ This is important and needs to be described further when time allows. ]Small enough to fail institutions like ... Bear and Lehman?mulp -> pgl... , December 21, 2016 at 12:34 PM
Theory aside, in the real life crisis we had risk built up across the entire system, not just big banks, and when a few midsized firms went under it broke the buck and everything went to hell.
Perhaps more importantly though, it was *consumers'* overleveraging that caused the prolonged depression. The big banks participated in that but didn't have central roles.
"Milton Friedman did as he studies their failures during the Great Depression."Paul Mathis : , December 20, 2016 at 12:45 PM
So, how is it that he promised money market funds would ever be at risk of insolvency and need Fed bailout of credit, and that money market funds would never face bank runs because no one would ever question their safety and solvency?
How is it that he failed to predict Primary Reserve breaking the buck and triggering bank runs on the shadow banks?
I remember the debate over Regulation Q and retail money market funds. I agreed with the big government liberals that it was going to end badly. That it took 37 years is not a surprise to me, but October 2008 was no surprise at all to me. It was forecast by my kind of economists in 1970 based on what happened multiple times before 1935 when sane bankers and economists developed the bank regulation that produced half a century of no bank crisis.
Friedman, on the other hand, argued for deregulation that delivered bank crisis in the late 80s, the 90s multiple times deftly handled by bailouts by both government and by forcing Wall Street banks to do Morgan bailouts, eg LTCM, and the IMF, and then yet again, the bank crisis of the 00s.
Three decades of bank crisis in four decades is hardly evidence Friedman understood banking.For Free Market Ideologues the Great Depression Never HappenedDeDude -> Paul Mathis... , December 20, 2016 at 02:13 PM
Simple question for Jeb H: Why was there a Great Depression when we had budget surpluses every year during the 1920s?
How could the Free Market have failed so completely from 1929 to 1933? We had gold money and regulations were minimal. It was the ideal context for the Free Market and yet the Dow lost 90% of its value. Why has the Dow nearly tripled in value now with Dodd-Frank in force?Those are the inconvenient facts and questions that are willfully ignored in order to avoid uncomfortable shaking of simple narratives.yuan -> Paul Mathis... , December 20, 2016 at 02:14 PMbut banks have under-performed relative to the market as a whole. now that government sachs controls the executive branch this may very well change!Paul Mathis -> yuan... , December 20, 2016 at 02:23 PMBanks Underperformed Because Rates Were Lowpgl -> Paul Mathis... , December 20, 2016 at 02:59 PM
Now that the Fed is raising rates, banks stocks are leading the stock market rally.I'm with yuan on this one. But this is a long story. For today - let me applaud you and yuan for bringing something new and needed here. Debates over actual economic analysis.pgl -> Paul Mathis... , December 20, 2016 at 03:01 PMI have particularly hard on pathetic BofA so I checked:yuan -> Paul Mathis... , December 20, 2016 at 03:02 PM
You have a point on the stock prices as even this welfare queen is finally doing well in the market place."Now that the Fed is raising rates, banks stocks are leading the stock market rally."pgl : , December 20, 2016 at 02:53 PM
i expect profit-generating financial innovation.Not financial regulation but a key issue - Paul Ryan's desire to lie to us on repealing Obamacare has taken a major hit from the CBO:Chris G : , December 20, 2016 at 04:36 PM
Shorter CBO - we are onto your lies Mr. Speaker.Lord save from True Believers like Hensarling.Larry : , December 20, 2016 at 06:12 PMWe got a lot more than the financial crisis from r lying on markets more than government. Yes, regs are necessary (externalities, monopolies, etc) but "the more the merrrier" is not the underlying principle. Read that D/F has > 20k "rules" with >300 "major" rules yet to be written after 6 years of work. The world changes way faster than government can. Regulators need to find much simpler, more general approaches ("less leverage") if they're going to continue to add value.jcb : , December 20, 2016 at 08:12 PMThis is a problem of the teaching of contemporary economics, not of Jed Hensarling. Economists tout simplified classical models as fundamentally correct, teach them in freshman Economics 101, and only admit that they don't approximate reality in Econ 401, for seniors. But most students never take another econ course after 101. The damage is done. Not surprisingly, most young Republicans discover that economic reality is...Free Market and Republican!100panthers : , December 20, 2016 at 09:01 PM
Think maybe it's time to show them that the classical model doesn't really work when they are freshmen, and not complain after they're already in Congress.Agency's '04 Rule Let Banks Pile Up New Debt100panthers : , December 20, 2016 at 09:03 PM
It was unanimous. The decision, changing what was known as the net capital rule, was completed and published in The Federal Register a few months later.
With that, the five big independent investment firms were unleashed.
In loosening the capital rules, which are supposed to provide a buffer in turbulent times, the agency also decided to rely on the firms' own computer models for determining the riskiness of investments, essentially outsourcing the job of monitoring risk to the banks themselves.
At Bear Stearns, the leverage ratio - a measurement of how much the firm was borrowing compared to its total assets - rose sharply, to 33 to 1.
http://mobile.nytimes.com/2008/10/03/business/03sec.htmlDo some economists live in Post-truth (errr...Post-eco-history) and not read economic history?reason : , December 21, 2016 at 12:10 AMAh, Texas the home of fundamentalism. Texas basically lives by sticking a big straw in the ground and selling what comes out. That is great until it (as it will) stops working. Texas is a caricature of all that is wrong with mankind.reason -> reason ... , December 21, 2016 at 12:11 AM(P.S. I'm not just talking about oil and gas, but also water.)reason -> reason ... , -1Another way to look at Texas is as the Saudi Arabia of North America. All that is missing is a King. The rest of the USA should get together and give it back to Mexico. Both countries would be better off.
[Dec 21, 2016]