"... 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." ..."
"... 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. ..."
"... 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. ..."
"... 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 40–50% in the year 2000.[56][57] 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. ..."
"... 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. ..."
"... 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! ..."
"... 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. ..."
"... 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). ..."
"... 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. ..."
"... 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. ..."
"... My own position has always been strongly in the former camp, supporting meritocracy over diversity in elite admissions. ..."
"... The Reality of American Mediocrity ..."
"... 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. ..."
"... 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. ..."
"... 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. ..."
"... 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 ..."
"... America never promised success through merit or equality. That is the American "dream." ..."
"... 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. ..."
"... 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. ..."
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.
[1] 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.
[2]
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.
[3] On the other side, finance remains the favored employment choice for Harvard, Yale or Princeton students after the diplomas
are handed out. [4]
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.
[5]
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.
[6] 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.
[7]
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.
[8] 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.
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.
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.
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.
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 speculation
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.
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.
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.
@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.
"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."
"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.
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.
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'
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 40–50% in the year 2000.[56][57] 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. [60] In 2000, there were
360,000 so-called "ultra-orthodox" (Haredi) Jews in USA (7.2%).[61] The figure for 2006 is estimated at 468,000 (9.4%).[61]"
"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.
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.
Yeah, my ultimate goal was to attend law school, and a big part of the heartbreak for me–or heartburn, the more cynical would
call it–was 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.
But–and I'm really not trying to sound corny 0r self-important here–what 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.
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.
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.
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).
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.
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.
"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.
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?
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.
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)?
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.
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?
"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.
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.
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?
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.
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.
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.
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.
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.
@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.
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.
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.
"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.
@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.
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).
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.
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. Oh–and my brother and I have four Ivy League degrees between us.
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.
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.
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.
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.
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 categories–though they must be a very large component of Mr Unz's pool
of top talent–are 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
value.
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 is–or was–Protean 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.
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.
"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.
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".
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?
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.
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.
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.
@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).
"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.
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.)
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.
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.
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.
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.
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?
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.
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.
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.
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.
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.
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.
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.
(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.
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.
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.
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.
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:
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.
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.
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.
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.
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).
"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?
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.
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.
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.
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.
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.
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.
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?
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?
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 arguments
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.
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.
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.
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?
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.
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.
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?"
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.
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.
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.
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 origins–often including changes in their last names–and 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.
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.
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.
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.
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.
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.
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.
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.
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.
"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.
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.
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.
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.
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.
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!
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.
see http://www.cse.iitb.ac.in/~sohoni/kpidc.pdf
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.
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.
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.
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.
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?
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.
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.
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.
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.
"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.
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?
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
Hindu
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.
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.
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.
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.
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 cents
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 is–I loved it there and I wish more people knew more about it)
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.
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?
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.
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.
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?
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.
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"
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.
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.
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?
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.
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.
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
Hindu
Takeaways:
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.
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 instance–or 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 colleges–an 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
).
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."
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.
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?
"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?
@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.
An 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).
Seems 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 reparations…
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.
Another 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:
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.
"... 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, 1867–1960" 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. ..."
"... 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. ..."
Ironic isn't it? "Why didn't ... 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."
Krugman should have stuck to economics...
likbez -> JohnH...
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, 1867–1960" 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.
Ironic isn't it? "Why didn't ... 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."
Krugman should have stuck to economics...
likbez -> JohnH...
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, 1867–1960" 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.
"... 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. ..."
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."
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.
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.
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.
anne -> Paul Mathis... , -1
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. ]
"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."
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).
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.
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.
Who Was Milton Friedman?
By Paul Krugman - New York Review of Books
1.
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....
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.
"... 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. ..."
"... "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." ..."
"... 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. ..."
"... 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... ..."
"... 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." ..."
"... 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. ..."
"... 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? ..."
"... The losers think the winners are as crooked as they! ..."
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.
In 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."
Nothing is more admirable than the fortitude with which millionaires tolerate the disadvantages of their wealth. -- Nero
Wolfe
You 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.
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...
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.
yuan -> JohnH...
and few liberal economists have been more skeptical of QE's economic impact than Krugman.
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?
The losers think the winners are as crooked as they!
yuan -> ilsm...
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...
"... And this is telling us something significant: namely, that supply-side economic theory is and always was a sham. ..."
"... 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. ..."
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.
Krugman was clearly a neoliberal propagandist on payroll. He
should not be even discussed in this context because his
columns were so clearly partisan.
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.
Cal -> likbez...
, -1
Krugman is a polarizing agent here in RiverCity...to our
collective loss IMHO...as you know I don't have the Nobel.
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.
Did not William Casey (CIA
Director) say, "We'll know
our disinformation program is
complete when everything the
American public believes is
false."?
Notable quotes:
"... 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. ..."
Americans 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.
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.
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/)
"... 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). ..."
"... 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. ..."
At 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.
It's a lot like when someone says "structural reform" without specification in an economic
discussion: An almost perfect indicator of vacuity.
likbez -> sanjait... , -1
Let'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.
[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".
You 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.
Did William Casey (CIA
Director) really say, "We'll know
our disinformation program is
complete when everything the
American public believes is
false."?
Americans 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.
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.
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!)
(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. ...
"... 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. ..."
"... 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." ..."
"... 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. ..."
"... 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. ..."
"... if you are proposing raising taxes on the rich SO THAT you can cut taxes on the non rich you are simply proposing theft. ..."
"... 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. ..."
"... 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.) ..."
"... made by the ayn rand faithful. it is wearisome. ..."
"... The only cure for organized greed is organized labor. ..."
"... A typical voice of American politics is the avoidance of saying anything real on real issues" ..."
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.
Comments (87)
Jerry Critter
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.
amateur socialist
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
Robert
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
coberly,
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.
K
coberly, April 4, 2015 12:34 pm
kai
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.
Kai-HK
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.
K
coberly, April 5, 2015 12:45 pm
kai,
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..
Last one.
"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
kai
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.
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??
Distributional National Accounts: Methods and Estimates for the United States
By Thomas Piketty, Emmanuel Saez, and Gabriel Zucman
Abstract
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.
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....
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. ...
I wonder what facts you have to label Trump's team "globalist shills".
Robert W. Merry in his National Interest article disagrees with you
http://nationalinterest.org/feature/trump-vs-hillary-nationalism-vs-globalism-2016-16041
=== 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.
"... 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." ..."
"... Characteristics of people dying by suicide after job loss, financial difficulties and other economic stressors during a period of recession (2010–2011): A review of coroners׳ records ..."
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. ...
... 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.
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 definitive
link between lost jobs and suicide; it
simply notes that as jobs left,
suicides rose.'
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
Characteristics of people dying by suicide after job loss, financial difficulties and other
economic stressors during a period of recession (2010–2011): A review of coroners׳ records
Caroline Coope, et al
Journal of Affective Disorders
Volume 183, 1 - September 2015
"... 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 ..."
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
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!'
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.
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?
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.
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.
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.
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
issues–Medicare 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.
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)
In 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.
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.
likbez -> AngloSaxon...
, -1
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.
Economist was always adamantly anti-Russian and, especially, anti-Putin. The use of people like
Sergey Guriev (recent emigrant to Paris, who excape to avoid the danger of criminal procecution for skolkovao machinations) is just an icing on the cake.
Notable quotes:
"... 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. ..."
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.
...
"... 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 ..."
"... The technocrats lied about how globalization would be great for everyone. People's actual experience in their lives has been different. ..."
"... 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. ..."
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:<) ]
The 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%.
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.
RC AKA Darryl, Ron said in reply to Peter K.... , -1
"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.
"... Excellent 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. ..."
"... That's the effect of incessant Dem propaganda pitting races and sexes against each other. ..."
"... 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. ..."
"... 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. ..."
"... Bernie Sanders was that standard bearer, but Krugman and the Neoliberal establishment Democrats (ie. Super Delegates) decided that they wanted to coronate Clinton. ..."
"... 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). ..."
"... 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. ..."
"... The central fact of the election is that Hillary has always been extraordinarily unlikable, and it turned out that she was Nixonianly corrupt ..."
"... 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 Establishment and their acolytes are caught in a credibility trap. ..."
"... 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. ..."
"... 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. ..."
"... 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? ..."
"... Clinton 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. ..."
"... I 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 Duy ..."
"... 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. ..."
"... Krugman 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. ..."
"... 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. ..."
"... Pretty sad commentary by neoliberal left screaming at neoliberal right and vice versa. ..."
"... 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. ..."
Excellent 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.
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."
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.
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.
God forbid somebody have to "pay some dues" before setting them loose as suit trash.
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."
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...
Basic political math - Sanders would have been eaten alive with his tax proposals by the GOP anti-tax
propaganda machine on Trump steroids.
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).
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).
You know what will win Texas? Demographic change. Economic growth. And it is looking pretty inevitable
on both counts.
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.
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.
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.
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.
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."
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.
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.
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.
This is an outstanding takedown on what has been a never-ending series of garbage from Krugman.
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."
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.
"I don't know that the white working class voted against their economic interest".
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.
I 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.
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.
One should note that the "The racist, sexist, homophobic, xenophobic, Islamaphobic - you name
it ... " voted for Obama last time around.
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):
http://ontodayspage.blogspot.com/2016/11/first-100-days-progressive-states-agenda.html
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.
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).
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.
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.
Tim'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?
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?
Clinton 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.
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-employment
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.
I 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 Duy
I 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?
Just 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.
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."
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."
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.
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 strategy
Krugman 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.
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.
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.
This Russian hacking thing is being discussed entirely out of realistic context.
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.
The 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.
"...I would suggest attacks on Putin's personal business holdings all over the world..."
[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.]
Voting 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.
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.
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.
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.
"They kept telling us the e-mail didn't reveal anything and now they say the e-mail determined
the election"
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?
I 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.
ABC video interview by Martha Raddatz of Donna Brazile 2:43
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... , -1
The 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
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)
"... 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. ..."
"... 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. ..."
"... 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. ..."
"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!
Division!
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.
"... 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. ..."
"... 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. ..."
Economists are still oblivious to the devastation created by 40 years of free trade.
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, -1
I 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.
"You control the message, and the facts do not matter. "
Notable quotes:
"... 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. ..."
"... 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. ..."
"... 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 ..."
"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
"... 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. ..."
You guys should wake up and smell what country you live in. Here is a good place to start.
"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."
Reading the above posts I am reminded that in November there was ONE Election with TWO Results:
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.
"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.
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.
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.
Photo
Tom Price, President-elect Trump's choice for secretary of
health and human services, has made proposals to deeply cut Medicaid.
Credit
Joshua Roberts/Reuters
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.
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.
"... 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. ..."
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.
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 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.
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.
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.
'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 .
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.
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.
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.
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.
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.
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.
"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.
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.
(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.
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:
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 ..."
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.
"... 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". ..."
By 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.
Unrealistic Micro-Foundations
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.
Endnotes
[1] 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.
[3] 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).
[4] 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.
[5] 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.
[6] 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).
[7] 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.
'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!"
' 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"
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
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.
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 .
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!
"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!).
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.
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.
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.
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.
Advanced:
"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.
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.
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.
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.
"... 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. ..."
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.
"... 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. ..."
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.
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)
Point 2:
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.
"... 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. ..."
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...
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... , -1
Japan 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.
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." https://en.wikipedia.org/wiki/International_use_of_the_U.S._dollar
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.
John San Vant -> JohnH... , -1
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.
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.
anne -> DrDick... , -1
There really is no "post-industrialization era", no matter what fantasies the Finance, Insurance,
and Real Estate sectors want to sell....
[ Interesting assertion. Do develop this further. ]
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.
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.
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?
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).
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.
Economists better abandon silly free trade if they want to have any credibility and not be
seen as quacks.
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.
From "One neat trick to stop Social Security 'Reform'" http://angrybearblog.com/2016/12/one-neat-trick-to-stop-social-security-reform.html
=== 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. Américas $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.
Growing inequality. We are already at Gini coefficients normally only found in banana republics.
Notable quotes:
"... 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. ..."
Just 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.
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
).
"... [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.] ..."
Companies 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 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.
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.
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.
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.]
"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.
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.
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 :-(.
Notable quotes:
"... 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. ..."
Impressionable journalists finally meet George Stigler.
The 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.
... ... ...
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.
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".
Notable quotes:
"... 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. ..."
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.
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.
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.
Exactly 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.
"What Krugman is pointing out is the hypocrisy of their tribalism "
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."
His 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.
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.
The 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.
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."
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. 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).
On 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.
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.
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).
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."
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.
... 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.
... 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.)
I have noted before that New England
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 the
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.
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?
"... 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. ..."
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.
"... 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. ..."
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. 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.
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.
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."
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.
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.
"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.
Following 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%.
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.
"is a debt-deflationary wage-price spiral inevitable?"
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.
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.
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).
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.
like 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.
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
"... 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. ..."
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.
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.
That is required to cover all the common law complexities from civil suits on labor issues being
legislated from the Federal bench.
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.
"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.
"The Gramm–Leach–Bliley Act (GLBA), also known as the Financial Services Modernization Act of
1999, (Pub.L. 106–102, 113 Stat. 1338, enacted November 12, 1999) is an act of the 106th United
States Congress (1999–2001). It repealed part of the Glass–Steagall 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 Gramm–Leach–Bliley 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.[1] The legislation was signed into law by President Bill
Clinton.[2]"
a good read but i disagree with their suggested approach:
"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.
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).
Small enough to fail institutions like ... Bear and Lehman?
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."
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 Happened
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?
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.
We 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.
This 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!
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 Debt
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.
Ah, 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.
Another 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.
"... Democracy is inevitably going to clash with the demands of Globalization as they are opposite. Globalization requires entrepreneurs to search cheaper means of production worldwide. ..."
"... In practice, this means moving capital out of the USA. ..."
"... To put it in Marxist terms the interests of American society to survive and prosper came into contradiction with the interests of capitalism as a system of production and with the capitalists as a class who has no homeland, and for whom homeland is where it is easier to make money. ..."
"... American capitalism from its very beginning was based on the assumption that what was good for business was good for America. Until 1929 it more or less worked. The robber barons were robbing other entrepreneurs and workers but at least they reinvested their ill gained profits in America. The crash of 1929 showed that the interests of Big Banks clashed with the interest of American society with devastating results. ..."
"... The decades after WWII have seen a slow and steady erosion of American superiority in technology and productivity and slow and steady flight of capital from the USA. Globalization has been undermining America. From the point of view of Global prosperity if it is cheaper to produce in China, production should relocate to China. From the point of view of America
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. [2]
