Thursday, July 19, 2007

Inequality Might Matter

James Taranto forwarded an article by Arthur C. Brooks of Syracuse University's Maxwell School. Professor Brooks makes several good arguments against the left's misguided obsession with income equality. In his research, Professor Brooks has found that inequality does not make poor people miserable and that:

"...the evidence reveals that it is not economic inequality that frustrates Americans. Rather, it is a perceived lack of opportunity. To focus our policies on inequality, instead of opportunity, is to make a serious error..."

Professor Brooks notes that some left wing academics hold that the wealthy should be taxed so that they will not work. The proponents of this theory believe that the only significance of high incomes is high earners' ability to make whoopee and spend money. This, of course, fails to grasp that high earners create consumer surplus, so that discouraging the productive wealthy from working would devastate national welfare.

Think of it this way. Let's say Albert Sabin and Jonas Salk had become wealthy as scientists. The left would argue that because they had made money in prior work, they should have been discouraged from doing further work because their high incomes might have been irritating to low-income Americans. However, the low-income Americans who would otherwise have suffered from polio might have been more irritated at the economists than at Sabin's and Salk's high incomes. Advocacy of broad policies based on narrow findings about reactions to income inequality puts academics making such generalizations into the quack category.

Brooks adds that the general level of happiness has not changed since 1972 and that economic mobility rather than equality creates happiness among Americans:

"An accurate and constructive vision of America sees a land of both inequality and opportunity, in which hard work and perseverance are the keys to jumping from the ranks of the have-nots to those of the haves. This vision promotes policies focused not on wiping out economic inequality, but rather on enhancing economic mobility."

Amen. But there are reasons to be concerned about inequality. Increasing income inequality may not result from free market sources. Rather, increasing income inequality may result from federal policies that liberal economists have previously advocated. These include (1) indirect effects of the income tax and (2) credit policies of the Federal Reserve Bank.

Marginal tax rates may discourage effort of low-wage workers, increasing inequality. Because income taxes discourage saving, they reduce capital formation. Capital formation increases wages, especially for blue collar workers.

Federal Reserve Bank policy may be the ultimate source of increasing income inequality. Professor Brooks ought to ask whether wages of low-wage workers relative to high-wage workers are increasing at the rate they did before the Fed was established in 1913. They likely are not. Since the 1970s there has been a flattening in real wage growth.

The reason the Fed's credit policies might result in more rapid income increases at the upper end of the distribution is that cheap credit increases the available investment opportunity set. Low interest rates increase profits. Increased profits help the wealthy. They may hurt low-income Americans if low interest rates expand the expected present value of returns on cost-strategy type investments such as moving plants overseas, reducing demand for domestic labor. Such investments might not be made in a high interest rate environment if they do not impact the expected present value of future earnings sufficiently. This could easily be the case.

An error that the American Enterprise Institute makes in its various media statements is the claim that credit expansion and interest rates are costless to the public. This is not true. Low-income workers may pay twice. First, because they do not participate in profit growth due to low interest rates because they are less likely to hold assets (stocks and real estate, for example). Second, if high earners are not like Sabin and Salk and are earning their high incomes because of Federal Reserve policy rather than because they create of consumer value. If easy money has resulted in extraction of wealth through "malinvestment", credit expansion may cause inequality and also result in inflation. Credit expansion is not free--it results in a declining dollar, high import costs, economic dislocation, and likely ultimately inflation. In the 1970s the sum of unemployment and inflation was called the "misery index".

In order to gauge the effects of increasing income inequality, Professor Brooks would need to look dynamically into the future, when Americans are confronted with inflation and economic dislocation due to the same Fed policies that have contributed to increasing income inequality. Although the claim that taxation is the solution to this problem is preposterous, the issue is more important than the American Enterprise Institute would like us to believe.

ACLU Aims to Give Right of Habeus Corpus to Enemy Combatants

Vigilant Freedom has distributed the following alert:

>"The ACLU has announced a strong push to end the US government’s ability to detain terrorists seized on the battlefield and try them under Military Commissions for their actions as enemy combatants. The Bush Administration has expressed its belief in the importance of preventing Islamist fighters from abusing the American civil judicial system. Now Senate Amendment S.A 2022 proposed by Senators Leahy and Specter seeks to undo that effort. The ACLU Washington Legislative Office is urging their members to lobby their Senators to institute the right of habeas corpus, a right of citizenship, for all enemy combatants. The ACLU writes: No president should ever be given the sole power to call someone an enemy and lock him or her away …but that is exactly the power the Bush administration has claimed.

"Write or call your Senators and let them know how you feel about awarding American civil rights to terrorists captured overseas and encourage them to consider carefully their vote on S.A 2022."

I wrote the following e-mail:

Dear Senator Schumer: I oppose Senators Leahy's and Specter's SA 2022 that would prohibit the president from detaining enemy combatants. The taking of military prisoners is a normal occurrence in war, and encouraging terrorist fighters to make use of the American legal system would guarantee their success. If there is another terrorist strike in the United States, Senators Leahy and Specter will deserve credit.

Congress Is Inept at Waging War

Frank Gaffney of the Washington Times writes:

"Some of Capitol Hill's...armchair generals propose to "relocate" the forces removed from Iraq to Kuwait or some other, "over-the-horizon" location. We are told they could then be reintroduced if things get ugly in Iraq — say, if al Qaeda's friends or Iranian-backed groups fill the vacuum of power created by our bailing out. Fat chance.

"First of all, it is certain that one or both of these predictable results will eventuate. Few, if any, of those insisting on our troops' extrication from a less-bad mess will be willing to support their renewed exposure to even greater dangers. And who's to say Kuwait will be willing to take our displaced legions, making the emirate the next battleground for the Islamofascists' "liberation" of Arab and Muslim lands?<

One of the considerable risks that confronts a republic is the legislature's inept interference in military issues. The public ought to ask Congress for a clear description of any strategies that it proposes and what its goals in implementing the strategies are. This one sounds like pure stupidity, much like the ideas in the New York Times. The public deserves a coherent SWOT analysis together with an explicit contingency plan as to what Congress expects given strategic moves such as this. Frankly, I do not see why this strategy is better in any way than President Bush's current strategy and expect that it will cause new problems. I do not hear a coherent Congressional argument or coherent discussion.

Wednesday, July 18, 2007

Oppression in Vietnam

I just received an e-mail from a group that calls itself concerning serious political suppression in Vietman.

>"In 1989 the Tiananmen Square protests were a series of protests led by students, intellectuals, and labor activists in China. In 2007 history may be about to repeat in Vietnam with over 1700 Vietnamese peasants from 19 provinces peacefully protesting the illegal confiscation of their land and properties.

"Since June 22nd, 2007, a growing number of peasant farmers have protested outside of the office of Vietnam Congress, at 194 Hoang Van Thu Street, Saigon. Their requests for meeting with communist officials went unanswered. While being disappointed, the protesters vowed not to give up as additional protesters from other provinces are coming in Saigon to join in the protest.

"By protesting, they all became homeless, sick, tired, and hungry and to discourage them, Vietnamese communist have shut down public restrooms and stopped other fellow countrymen from offering the protesters food, beverages and medicine.

"According to sources from within Vietnam, Vietnamese communist has deployed armed police in uniformed in marked and unmarked vehicles surrounding the protestors, ready for an attack.

"Vietnam communist government has turned off electricity, scrambled cellular phone signals, restricted media coverage, and deployed hundreds of military personnel with heavy equipment and military tanks ready for the crackdown and slaughter of the protesters.

"The Vietnamese communist could begin the massacre at any moment.

"Vietnamese Americans are pleading with all Americans, President Bush, Vice President Cheney, members of US Senate and Congress, and members of the media to take immediate actions in order to prevent another Tiananmen Square massacre from happening.

"Thank you and God bless America!!!"

The group urges that we e-mail the White House supporting the protestors.

Tuesday, July 17, 2007

Videos from the Israel Soldiers Rally

Pamela Hall just sent these links to video of the Israel Soldiers Rally.
73 stills

The 6 videos are short
About 12:30 . The place was packed!

Ehud Goldwasser's wife speaking...

Three Generations of AP Reporters are Enough: Matt Crenson and Height

The nineteenth and early twentieth century claim that human beings ought to be bred to become taller, more intelligent, stronger or more attractive was discredited in part by the fallacious statistical reasoning of some of its advocates and in part through its association with Nazism. From the 1920s through the early 1970s, the Lynchburg Training School and Hospital forcibly sterilized 4,000 people who were mentally challenged, some of whom would not be considered so today. The sterilization policy was legally challenged in the case of Buck v. Bell. In this famous decision Oliver Wendell Holmes declared that "three generations of imbeciles are enough".

In the nineteenth century, one of the errors that eugenicists made was the fallacy of regression to the mean. Eugenicists noticed that tall fathers had shorter sons, and concluded that people were becoming shorter. In fact, extreme realizations of a random process are usually followed by less extreme realizations. The same gene pool that produced a great person will usually produce lesser lights in subsequent generations since the exceptional person was an outlier, an exceptional realization of the distribution.

In the case of height, there are a number of reasons for height differentials. While diet and quality of health care might contribute to height, there are also genetic differences across ethnic groups. Thus, it is not a particularly interesting observation that height can correlate with wealth (since diet and health care contribute to height) but that genetic differences probably play a role as well.

In a recent AP column, Matt Crenson draws several conclusions that are as naive as those that 19th century eugenecists drew despite a century-and-a-half of improved statistical knowledge. Crenson observes that America is not the tallest country and that the average height in many European countries is taller. He then goes on to make the statement:

Many economists would argue that it does matter, because height is correlated with numerous measures of a population's well-being.

Crenson falls prey to a basic fallacy of statistical reasoning, taught in any basic statistics course: correlation does not imply causation. It may be true that height is correlated with well-being, but it is absurd to claim that well-being is the cause of height differences between US and European countries. Only an AP reporter would imagine that Americans are suffering from calorie deprivation.

Crenson contradicts himself as follows:

"Like many human traits, an individual's height is determined by a mix of genes and environment. Some experts put the contribution of genes at 40 percent, some at 70 percent, some even higher. But they all agree that aside from African pygmies and a few similar exceptions, most populations have about the same genetic potential for height."

This paragraph illustrates what is wrong with the media today. Does Crenson really believe that if genes contribute 40 to 70 percent of variability in height, then different populations with different gene pools do not have differences in height?

The median 35-45-year-old male white American's height is about 70 inches. The median 35-45-year-old Mexican-American's height is about 67 inches. The differences in height between Europeans and Americans to which Crenson alludes are 1-2 inches.

Crenson notes that there is a 1 1/2 inch difference in average height between US cities and rural areas so that rural Americans are as tall as Europeans. But, due to Crenson's being the third generation of AP reporter, he cannot figure out that there are ethnic differences between American urban areas, where somewhat shorter Mexican-American and Asians are more common, and rural areas where slightly taller whites predominate.

Perhaps Crenson's solution is to sterilize urban Americans?

Monday, July 16, 2007

Joe Repya's "I'm Tired" and the Baby Boom

Norma Segal just forwarded this letter from Lieutenant Colonel Joe Repya.

>"I'm Tired
BY: Joe Repya, Lieutenant Colonel, U. S. Army
101st Airborne Division

Two weeks ago, as I was starting my sixth month of duty in Iraq, I was forced to return to the USA for surgery for an injury I sustained prior to my deployment. With luck, I'll return to Iraq to finish my tour.

I left Baghdad, and a war that has every indication that we are winning, to return to a demoralized country much like the one I returned to in 1971 after my tour in Vietnam. Maybe it's because I'll turn 60 years old in just four months, but I'm tired:

I'm tired of spineless politicians, both Democrat and Republican, who lack the courage, fortitude and character to see these difficult tasks through.

I'm tired of the hypocrisy of politicians who want to rewrite history when the going gets tough.

I'm tired of the disingenuous clamor from those that claim they 'Support the Troops' by wanting them to 'Cut and Run' before victory is achieved.

I'm tired of a mainstream media that can only focus on car bombs and casualty reports because they are too afraid to leave the safety of their hotels to report on the courage and success our brave men and women are having on the battlefield.

I'm tired that so many Americans think you can rebuild a dictatorship into a democracy overnight. I'm tired that so many ignore the bravery of the Iraqi people to go to the voting booth and freely elect a Constitution and soon a permanent

I'm tired of the so called 'Elite Left' that prolongs this war by giving aid and comfort to our enemy, just as they did during the Vietnam War.

I'm tired of antiwar protesters showing up at the funerals of our fallen soldiers, a family whose loved ones gave their life in a just and noble cause, only to be cruelly tormented on the funeral day by cowardly protesters is beyond shameful.

I'm tired that my generation, the Baby Boom --Vietnam generation, who have such a weak backbone that they can't stomach seeing the difficult tasks through to victory.

I'm tired that some are more concerned about the treatment of captives than they are the slaughter and beheading of our citizens and allies.

I'm tired that when we find mass graves it is seldom reported by the press, but mistreat a prisoner and it is front-page news.

Mostly, I'm tired that the people of this great nation didn't learn from history that there is no substitute for victory.


Joe Repya, Lieutenant Colonel, U. S. Army
101st Airborne Division >"

One of several of Repya's points that deserves further exploration is the one about the baby boomers. The baby boom generation is the one that was too self-indulgent to care about the political milking of the social security system even as they spent carelessly and failed to save for retirement. They are the generation that watched while health care costs spun out of control, and likely will spin even further when they most need care, without lifting a finger to solve the problem. The baby boom is the generation that watched Alan Greenspan debase the US dollar but lacked the cognitive reasoning skills to voice concern. The baby boom is the generation that watched higher education costs spin out of control while educational standards and achievement plummeted. The baby boom is the generation that watched lower educational standards plummet while corporations fled the country. Is it surprising that the baby boom lacks the courage and ability to confront terrorism? Repya is right about the baby boom.

Hamline University Student Suspended

According to the May 9, 2007 City Pages of Minneapolis/St. Paul Troy Scheffler, who holds a gun permit in Minnesota, was placed on interim suspension, and:

"to be conisdered for readmission to Hamline he would have to pay for a psychological evaluation and undergo any treatment deemed necessary."

Because of his suspension, Mr. Scheffler got a low grade in his human resource management class.

According to the article:

"Scheffler has tried to get answers from the university, to no avail. On April 25, he called President Hanson's office to request a meeting, but when he told the secretary his name, she claimed the computer system had crashed and she couldn't access the president's schedule. She promised to call Mr. Scheffler back, but more than a week later, he's still waiting."

Mr. Scheffler is very much a product of a left-wing education, first in his weak writing skills and second in his fixation on identity politics. One can see in this incident the bias in higher education. On the one hand, endless hate-filled ranting about group "rights", with "groups" narrowly and intolerantily defined in terms of "women", "gay", "black", "Jewish", "Hispanic",etc. . On the other, when Mr. Scheffler claims a similar group right as "white" he is thrown out of school. The education system can't stand a mirror. Identity politics is a polite name for bigotry. The American education system, with its focus on identity politics, is the greatest advocate of bigotry in America today.

Upon review of Mr. Scheffler's e-mails below, I am, on the one hand, dismayed that he has progressed to the master's degree level without having mastered some aspects of basic grammar. In describing his course work as a "let down", Mr. Scheffler may sense that he has not progressed with respect to basic skills. On the other hand, although I find some of his views to be distasteful (particularly with respect to race), I do not think that suspension is the right way to handle distasteful e-mails that express intolerant views. A better approach would have been to open debate on the points that Mr. Scheffler raises, inviting others with different views to respond in a public forum.

Where are the writing standards? I teach human resource management every semester and carefully edit the students' writing, much of which is as bad as or worse than Mr. Scheffler's. I encourage troubled writers to attend remedial sessions. I give multiple writing assignments. But I cannot teach college students to write, in part becaue I do not teach writing. I teach business administration.

I empathize with Mr. Scheffler. Many students have pursued expensive and time consuming educational programs but still lack basic skills. Diane Ravitch's book Left Back explains the underlying problem as a lack of focus on the basics; a lack of interest in liberal education; and misapplication of the ideas of progressive education.

The following are the e-mails, copied from the article, that resulted in Mr. Scheffler's suspension:

>"From: Tough Guy Scheffler
To: David Stern
Subject: I dont think the students need the counseling...
Sent: Tuesday, April 17, 2007 10:54 PM

Considering this university also pushes "diversity" initiatives like VA Tech, maybe its "leadership" will reconsider its ban on conceal carry law abiding gun owners... Ironically, according to a few VA Tech forums, there are plenty of students complaining that this wouldnt have happened if the school wouldnt have banned their permits a few months ago...

I just dont understand why leftists dont understand that criminals dont care about laws; that is why they're criminals... Maybe this school will reconsider its repression of law abiding citizens rights.

Considering that accoriding to the university president that there were recently serious "hate crimes" that were committed in the womens bathrooms; there may be people on the edge ready to snap. I cant say I blame them, I myself am tired of having to pay my own extremely overpriced tuition to make up for minorities not paying theirs. On top of that, I am sick of seeing them held to a different standard than the white students (Of course its a lower and more lenient standard).

Oh by the way, when is your "diversity" department going to include European ancestry?

Troy Scheffler

> "Tough Guy Scheffler" >>> 4/19/2007 10:15 PM >>>

I was wondering why a swastika painted by some frustrated ladies in their bathroom turned somehow into red flags of a hate crime but you dont consider an asian guy admittedly killing people because he hated them not hate motivated...

Anyhow, in response to your most recent email concerning a vigil for people most likely nobody in the school knows; I would like to comment on your claims of upped "security". I attend a MPLS cohort so I dont see any security in the area ever. Infact it seems the dirty bums on the street are the only ones patrolling anything. I would suggest if you are truley concerned about student security, you lift a ridiculous conceal carry campus ban and let the students worry about their own "security". VA Tech just recently passed their conceal carry permit ban; we can all see how well that worked for criminal minds.

Ironically, many students from VA Tech are in online forums which I can direct you to complaining that 32 people wouldnt have died in the students rights were not infringed by banning their legal right to carry their arms on their person. They take the argument that they would have shot the guy before he was able to massacre that many people; I on the other hand would argue that the guy wouldnt have even attempted this atrocity not only if we didnt pay for everybody and their mother to come here for free to soak up tuition funds but also that by knowing law abiding citizens carried weapons to defend themselves that criminals wouldnt be so bold to commit crimes against them...

As usual, Im sure this plea of common sense will fall on deaf ears as I recently responded to a general email notifying students of the conceal carry ban...

On a lighter note... For a "Christian" university, I am very disappointed in Hamline. With the motif of the curriculum, the atheist professors, jewish and other non-Christian staff, I would charge the school with wanton misrepresentation.

Yes, I obviously feel that Hamline has been a serious let down, so far I am almost finished with half of my MAPA degree and havent even cracked a book. All the books that came in plastic wrap are still in plastic wrap despite the ridiculous amounts students are charged. I have yet to hear a student in my cohort that is happy with the curriculum or quality of professors. Why does this school charge so much for such a substandard education?

Furthermore, why are you diversity initiatives anti-Euro American (ie white folks)? All over the university grounds I see loads of leftist propaganda, why not warn a student before they enroll at Hamline? It took me complaining to a few different people before even the hamline website finally included white people in the random pictures on the main page. If I remember corrextly it was like 1 white in a picture out of like 12... Now it is obviously better but just goes to show how biased this university is and the painstaking efforts of diversity pandering it does at the expense of people that are actually planning on contributing back to the TAXPAYERS that are footing the bill for your diversity initiatives. In fact, 3 out of 3 students just in my class that are "minorities" are planning on returning to Africa and all 3 are getting a free education ON MY DOLLAR. I bet the staff here is wondering how a swastika ended up in a bathroom... More people than you can imagine are tired of this all. It's just sad that they resort to petty vandalism rather than speak their mind like I am.

Please stop alienating the students that are working hard every day to pay for their tuition. Maybe you can instruct your staff on sensitivity training towards us "privilaged white folk". If your staff is going to continually berate the evil white male for this privilage and his racist tendencies, at least have them explain where to find the privilages and point out the evil people that are ruining the world. Strange for how horribly racist Europeans and other white people are that everyone seems to want to exploit our generosity. Maybe someday the favor will be returned but I doubt it seeing what I have so far...

Thanks for your time...
Troy Scheffler"

Note: Declan McCullagh of CNET discusses this blog here.

Goldbug Predicts That Gold Stocks Will Explode

Goldbug Howard S. Katz predicts that gold and gold stocks are about to explode and that interest rates are on the way up:

"Gold acts as a representative commodity, and the past year has seen a pause in gold and gold stocks, which have been resting and gathering strength. The explosion in gold stocks since late June indicates a massive up move over the remainder of the year. This is your chance to stick it to the economic establishment.."

In his July 16 blog, Katz notes that the Fed and Keynesian monetary policy interfere with the free choices of economic actors and that during the past two decades Fed policy has harmed retirees and others who depend on short term interest payments. One cannot, argues Katz, create wealth by expanding the money supply.