From the Comments: Asylum Seekers and the Canadian Experience

Dr Amburgey takes some precious time out of his schedule to rebut Dr J:

@Brandon

I can understand your reluctance to yet again engage with Professor Pinocchio’s fact-resistant Islamophobia. However you must give him credit for actually using some real data. Granted the choice of country and time period are idiosyncratic [id est cherrypicked] but anything not pulled straight from his anus is a dramatic change. Should you feel like responding in kind, use this: Canada for the period 2004 – 2013. Top 8 countries of origin for refugees landing in Canada

Columbia – 17381
China – 15344
Sri Lanka – 12326
Pakistan – 10641
Haiti – 7872
Mexico – 6512
India – 4988
USA – 4451

Based on this data Catholicism and Hinduism far outstrip Islam as religions producing sick societies.There is currently no other view that is even modestly supported by anything but ideological intransigence.

Indeed. Only the most ideological of ideologues continue to pretend that Islam is responsible for the problem in the Middle East.

When the Austro-Hungarian empire collapsed, the Holocaust happened. One could argue that, because the state is less efficient on the post-Ottoman world, what we’re witnessing is a process similar to the one we witnessed in the Occident, only in a much more haphazard way.

How does emigration impact institutions?

Hello everyone. As usual I’ve come to ask for feedback on my latest research. I can’t emphasize enough how much it helps to blog it out, if only because it forces me to sit down and try to summarize things in a few hundred words.

My current research is looking at the effect emigration has, if any, on institutions. Institutions come in various forms. The state is an institution, but family, religion, and even organized crime are too. Broadly speaking institutions are those rules that govern society, both formal and informal. Institutions have increasingly been acknowledged as being one of the key (if not the key) determinants of a nation’s wealth.

Despite the importance of institutions, we know relatively little about them. By no means is this due to a lack of trying, and in there have been some earnest attempts to tackle the issue. Acemoglu’s Why Nations Fail is one such attempt.* For the time being the goal in institutional studies is to properly explain how and why institutions form.

My goal is to neither explain the origin of institutions or to measure their impact on economic well being. I take it for granted that good (and bad) institutions populate the world. Instead I am interested in how different institutions interact with one another.

My former boss at Cato has looked at how immigration has influenced a destination country’s (the USA) institutions. He finds little effect. In my project I try to look at the problem from the opposite end – how does emigration influence an origin country’s institutions. To measure the impact of emigration I use remittance data.

Remittances come in two form. There are monetary remittances, which are cash transfers from emigrants to their family members and friends back home. There is a broad economic literature on the former and its affect on development outcomes. There is however little (if any- I haven’t found any at least) economic work on social remittances. Social remittances is the transfer of ideas from emigrants to their family members and friends. In general the economic remittance literature has not yet attempted to connect itself with the institution literature despite both being part of the larger development literature.

Most work on social remittances has been done by sociologists. Thus far though most of the work has been qualitative and/or focused on how social remittances tie migrant communities with their origin countries. There has been little work on how this communication translates to changes in institutions.

Political scientists are currently taking the lead on the question. Earlier this year Abel et al. published a paper looking at how remittances affect democratic transition. They find that increased monetary remittances decreases voter turn out and thus weakens the political base of populist-based autocracies. Another recent paper by Miller et al. find that emigration increase the possibility of civil war by giving opposition parties an external funding source.

I think Abel and Miller’s work the best thus far in seeing how emigration affects institutions. My biggest concern with Abel’s paper is that he looks at democratic transition events, but there is no reason why democracy must lead to better institutions. Hong Kong and Singapore alternate as the most economically free states in the world, but neither is a bastion of democracy. India is the world’s largest democracy and by most metrics has awful institutions.

Miller’s work on the other hand looks at how the probability of civil war increases, but civil war in itself is not always bad. On occasion war is necessary for the improvement of institutions**.

To remedy my concerns I look at how remittances marginally influence institutions. I use the Fraser Institute’s Economic Freedom in the World summary index as my measure of a country’s institutions. My regression tables are found below. All observations are for north American (including central America but excluding the Caribbean) countries from 1994-2012.

Column 1 is a simply regression between a country’s EFW score and remittances as a percent of GDP. Initially we find a negative correlation between the two – a 1 percentage point increase in remittances is associated with a 0.01 point decrease in its EFW score. Is this a sign that brain drain, the emigration of high skilled migrants, is reducing the institutional qualify of origin countries? Not quite – it’s simply caused by the lack of control variables. At this point remittances is a proxy for a country being undeveloped.

Columns 2-4 are me playing around with various control variables. The interaction of phone subscriptions with remittances is my attempt to proxy for social remittances. Presumably emigrants are more likely to call back home, and exchange ideas, if their family members and friends have a phone to be contacted at. The 1 year lagged EFW index symbolizes the ‘stickiness’ of institutions: in the short run institutions do not drastically change.

Column 5 is simply column 4 re-run using clustered errors and country fixed effects. Country fixed effects, for those of you who have been spared endless hours of statistical classes, is a technique that allows us to account for unobserved characteristics of a country that do not change across the observed time span. This is usually done to account for such things as culture or geography.

In this final iteration we find that a one percentage point increase in remittances increases a country’s EFW index score by 0.05 points. This is a marginal effect, but its not irrelevant. See the Cato Institute’s interactive map of economic freedom. The difference between the United States and Russia is about one point despite the former presumably being a bastion of freedom.

Thoughts?

*Why Nations Fail has been discussed on NOL several times before, see here and here.
** But let me emphasize that this is rarely the case and war should be the last option. We really do need to make our own NOL foreign policy quiz.

(1) (2) (3) (4) (5)
VARIABLES EFW Index EFW Index EFW Index EFW Index EFW Index
Remittances as a percent of GDP – Fraser EFW -0.01* 0.04*** 0.00 0.01** 0.05***
(0.01) (0.01) (0.00) (0.01) (0.01)
Fixed telephone subscriptions (per 100 people) 0.03*** 0.01* 0.01
(0.00) (0.00) (0.01)
Remittances * Phone -0.00 -0.00 -0.00**
(0.00) (0.00) (0.00)
EFW Index 1-year lag 0.81*** 0.78*** 0.54***
(0.04) (0.05) (0.05)
Income Per Capita in 000s, Constant 2005 dollars. 0.00* -0.00 -0.01
(0.00) (0.00) (0.05)
Constant 7.39*** 6.60*** 1.33*** 1.50*** 3.04***
(0.06) (0.06) (0.28) (0.32) (0.45)
Country Fixed Effects No No No No Yes
Observations 134 134 110 110 110
R-squared 0.03 0.66 0.91 0.91 0.93

Standard errors in parentheses in columns 1-4. Robust errors in column 5.

*** p<0.01, ** p<0.05, * p<0.1

Tricks of Unequal Poverty: A Repost (In Honor of Bernie Sanders)

Note: This is an old post, reproduced today in honor of American Senator and presidential candidate Bernie Sanders

In the previous installment:

I explained how the general standard of living in America, denoted by real income, grew a great deal between 1975 and a recent date, specifically, 2007. This, in spite of a widespread rumor to the contrary. The first installment touched only a little on the following problem: It’s possible for overall growth to be accompanied by some immobility and even by some regress. Here is a made-up example:

Between the first and the second semester, grades in my class have, on the average, moved up from C to B. Yet, little Mary Steady’s grade did not change at all. It remained stuck at C. And Johnny Bad’s grade slipped from C to D.

Flummoxed by the sturdiness, the blinding obviousness of the evidence regarding general progress in the standard of living, liberal advocates like to take refuge in more or less mysterious statements about how general progress does not cover everybody. Or not everybody equally, which is a completely different statement. They are right either way and it’s trivial that they are right. Let’s look at this issue of unequally distributed economic progress in a skeptical but fair manner.

It’s awfully hard to prevent the poor, women and minorities from benefiting

I begin by repeating myself. As I noted in Part One, it’s too easy to take the issue of distribution of income growth too seriously. Some forms of improvements in living standard simply cannot practically be withheld from a any subgroup, couldn’t be if you tried. Here is another example: Since 1950, mortality from myocardial infarctus fell from 30-40% to 5-8%. (from a book review by A. Verghese in Wall Street Journal 10/26 and 10/27 2013). When you begin looking at these sort of things, unexpected facts immediately jump at you.

Fishing expeditions

The US population of 260 millions to over 300 million during the period of interest 1975-2007 can be divided in an infinity of segment, like this: Mr 1 plus Mr 2; Mr 2 plus Mrs 3; Mr 2 and Mrs3 plus Mr 332; Mr 226 plus Mrs 1,000,0001; and so forth.

Similarly, the period of interest 1975 to 2007 can be divided in an infinity of subperiods, like this: Year 1 plus year 2; year 1 plus year 3; years 1, 2, 3 plus year 27; and so forth. You get the idea.

So, to the question: Is there a subset of the US population which did not share in the general progress in the American standard of living during some subperiod between 1975 and 2007?

The prudent response is “No.” It’s even difficult to imagine a version of reality where you would be right to affirm:

“There is no subset of the US population that was left behind by general economic progress at any time during the period 1975- 2007.”

Let me say the same thing in a different way: Given time and good access to info, what’s the chance that I will not find some Americans whose lot failed to improve during the period 1975 to 2007? The answer is zero or close to it.

This is one fishing expedition you can join and never come back empty-handed, if you have a little time.

Thus, liberal dyspeptics, people who hate improvement, are always on solid ground when they affirm, “Yes, but some people are not better off than they were in 1975 (or in ______ -Fill in the blank.)” The possibilities for cherry-picking are endless (literally).

Everyone therefore has to decide for himself what exception to the general fact of improvement is meaningful, which trivial. This simple task is made more difficult by the liberals’ tendency to play games with numbers and sometimes even to confuse themselves in this matter. I will develop both issues below.

To illustrate the idea that you have to decide for yourself, here is a fictitious but realistic example of a category of Americans who were absolutely poorer in 2007 that they were in 1975. You have to decide whether this is something worth worrying about. You might wonder why liberals never, but never lament my subjects’ fate.

Consider any number of stock exchange crises since 1975. There were people who, that year, possessed inherited wealth of $200 million each, generating a modest income of $600,000 annually. Among those people there were a number of stubborn, risk-seeking and plain bad investors who lost half of their wealth during the period of observation. By 2007, they were only receiving an annual income of $300,000. (Forget the fact that this income was in inflation shrunk dollars.) Any way you look at it, this is a category of the population that became poorer in spite of the general (average) rise in in American incomes. Right?

Or, I could refer to the thousands of women who were making a living in 1975 by typing. (My doctoral dissertation was handwritten, believe it or not. Finding money to pay to get it typed was the hardest part of the whole doctoral project.) One of the many improvements brought about by computers is that they induced ordinary people to learn to do their own typing. Nevertheless, there was one older lady who insisted all along on making her living typing and she even brought her daughter into the trade. Both ladies starved to death in 2005. OK, I made them up and no one starved to death but you get my point: The imaginary typists fell behind, did not share in the general (average) improvement and their story is trivial.

So, I repeat, given a some time resources, I could always come up with a category of the US population whose economic progress was below average. I could even find some segment of the population that is poorer, in an absolute sense, than it was at the beginning of the period of observation. Note that those are two different finds. Within both categories, I could even locate segments that would make the liberal heart twitch. I would be a little tougher to find people who both were poorer than before the period observation and that would be deserving of liberal sympathy. It would be a little tough but I am confident it could be done.

So, the implication here is that when it comes to the unequal distribution or real economic growth you have to do two things:

A You have to slow down and make sure you understand what’s being said; it’s not always easy. Examples below.

B You have to decide whether the inequality being described is a moral problem for you or, otherwise a political issue. (I, for one, would not lose sleep over the increased poverty of the stock exchange players in my fictitious example above. As for the lady typists, I am sorry but I can’t be held responsible for people who live under a rock on purpose.)

Naively blatant misrepresentations

A hostile liberal commenter on this blog once said the following:

“Extreme poverty in the United States, meaning households living on less than $2 per day before government benefits, doubled from 1996 to 1.5 million households in 2011, including 2.8 million children.”

That was a rebuttal of my assertion that there had been general (average) income growth.

Two problems: first, I doubt there are any American “households” of more than one person that lives on less than $2 /day. If there were then, they must all be dead now, from starvation. I think someone stretched the truth a little by choosing a misleading word. Of maybe here is an explanation. The commenter alleged fact will provide it, I hope.

Second, and more importantly, as far as real income is concerned, government benefits (“welfare”) matter a great deal. Including food stamps, they can easily triple the pitiful amount of $2 a day mentioned. That would mean that a person (not a multiple person- household ) would live on $1080 a month. I doubt free medical care, available through Medicaid, is included in the $2/day. I wonder what else is included in “government benefits.”

The author of the statement above is trying to mislead us in a crude way. I would be eager to discuss the drawbacks of income received as benefits in- instead of income earned. As a conservative, I also prefer the second to the first. Yet, income is income whatever its source, including government benefits.

The $2/day mention is intended for our guts, not for our brains. Again, this is crude deception.

Pay attention to what the other guy asserts sincerely about economic growth.

Often, it implies pretty much the reverse of what he intends. In an October 2013 discussion on this blog about alleged increasing poverty in the US, asked the following rhetorical question:

“Or have Americans’ standard of living only improved as the gap [between other countries and the US] closed?“

I meant to smite the other guy because the American standard of living has only increased, in general, as we have seen (in Part One of this essay posted). A habitual liberal commenter on my blog had flung this in my face:

“….Since 1975, practically all the gains in household income have gone to the top 20% of households…” (posted 10/23/13)

(He means in the US. And that’s from a source I am not sure the commenter identified but I believe it exists.)

Now, suppose the statement is totally true. (It’s not; it ignores several things described in Part One.) The statement says that something like roughly 60 million Americans are richer than they, or their high income equivalents were in 1975. It also says that other households may have had almost stationary incomes (“practically”). The statement does not say in any way that anyone has a lower income in 1975. At best, the statement taken literally, should cause me to restate my position as follows:

“American standards of living have remained stationary or they have improved….”

You may not like the description of income gains in my translation of the liberal real statement above. It’s your choice. But the statement fails to invalidate my overall assertion: Americans’ standard of living improved between 1975 and 2007.

What the liberal commenter did is typical. Liberals always do it. They change the subject from economic improvement to something else they don’t name. I, for one, think they should be outed and forced to speak clearly about what they want to talk about.

Big fallacies in plain sight

Pay attention to seemingly straightforward, common liberal, statist assertions. They often conceal big fallacies, sometimes several fallacies at once.

Here is such an assertion that is double-wrong.

“In the past fifteen years the 20% of the population who receive the lowest income have seen their share of national income decrease by ten percentage points.” (Posted as a comment on my blog on 10/21/13)

Again, two – not merely one – strongly misleading things about this assertion. (The liberal commenter who sent it will assure us that he had no intention to mislead; that it’s the readers’ fault because, if…. Freaking reader!)

A The lowest 20% of the population of today are not the same as those of fifteen years ago, nor should you assume that they are their children. They may be but there is a great deal of vertical mobility in this country, up and own. (Just look at me!)The statement does not logically imply that any single, one recognizable group of social category became poorer in the interval. The statement in no way says that there are people in America who are poor and that those same people became poorer either relatively or in an absolute sense. Here is a example to think about: The month that I was finishing my doctoral program, I was easily among the 20% poorest in America. Hell, I probably qualified for the 5% poorest! Two months later, I had decisively left both groups behind; I probably immediately qualified for the top half of income earners. Yet, my progress would not have falsified the above statement. It’s misleading if you don’t think about it slowly, the way I just did.

I once tried to make the left-liberal vice-president of a Jesuit university understand this simple logical matter and I failed. He had a doctorate from a good university in other than theology. Bad mental habits are sticky.

B Percentages are routinely abused

There is yet another mislead in the single sentence above. Bear with me and ignore the first fallacy described above. The statement is intended to imply that the poorer became poorer. In reality, it implies nothing of the sort. Suppose that there are only two people: JD and my neighbor. I earn $40, neighbor earns $60. In total, we earn. $100 Thus my share of our joint income is 40%, neighbor’s is 60%. Then neighbor goes into business for himself and his income shoots up to $140. Meanwhile, I get a raise and my income is now $60.

In the new situation, my share of our joint income has gone down to 30% (60/60+140), from 40%. (Is this correct? Yes, or No; decide now.) Yet, I have enjoyed a fifty percent raise in income. That’s a raise most unions would kill for. I am not poorer, I am much richer than I was before. Yet the statement we started with stands; it’s true. And it’s misleading unless you pay attention to percentages. Many people don’t. I think that perhaps few people do.

My liberal critic was perhaps under the impression that his statement could convince readers that some Americans had become poorer in spite of a general (average rise) in real American income. I just showed you that his statement logically implies no such thing at all. If he want to demonstrate that Americans, some Americans, have become poorer, he has to try something else. The question unavoidably arises: Why didn’t he do it?

Was he using his inadequate statement to change the subject without letting you know? If you find yourself fixating on the fact that my neighbor has become even richer than I did because he more than doubled his income, the critic succeeded in changing the subject. It means you are not concerned with income growth anymore but with something else, a separate issue. That other issue is income distribution. Keep in mind when you think of this new issue that, in my illustration of percentages above, I did become considerably richer.

Liberals love the topic of unequal progress for the following reason:

They fail to show that, contrary to their best wish, Americans have become poorer. They fail almost completely to show that some people have become absolutely poorer. They are left with their last-best. It’s not very risky because, as I have already stated, it’s almost always true: Some people have become not as richer as some other people who became richer!

Policy implications of mis-direction about income growth

The topic matters because, in the hands of modern liberals any level of income inequality can be used to call for government interventions in the economy that decrease individual liberty.

Here are a very few practical, policy consequences:

A Income re-distribution nearly always involves government action, that is, force. (That’s what government does: It forces one to do what one wouldn’t do out of own inclination.) That’s true for democratic constitutional governments as well as it is for pure tyrannies. In most countries, to enact a program to distribute the fruits of economic growth more equally it to organize intimidation and, in the end, violence against a part of the population. (For a few exceptions, see my old but still current journal article: “The Distributive State in the World System.“ Google it.) This is a mild description pertaining to a world familiar to Americans. In the 1920s, in Russia, many people (“kulaks”) were murdered because they had two cows instead of one.

Conservatives tend to take seriously even moderate-seeming violations of individual liberty, including slow-moving ones.

B Conservatives generally believe that redistribution of income undermines future economic growth. With this belief, you have to decide between more equality or more income for all, or nearly all (see above) tomorrow?

It’s possible to favor one thing at the cost of bearing the travails the other brings. It’s possible to favor the first over the second. This choice is actually at the heart of the liberal/conservative split. It deserves to be discussed in its own right; “Do your prefer more prosperity or more equality?” The topic should not be swept under the rug or be made to masquerade as something else.

If you are going to die for a hill, make sure it’s the right hill.

PS: There is no “income gap.”

Growing Poverty in the US: A Repost (In Honor of Bernie Sanders)

This is an old post, reproduced today in honor of American Senator and presidential candidate Bernie Sanders

It’s vital to the liberal narrative that pretty much everything has to go generally downhill (except global warming, of course, which is always going up even when it’s not, like right now). Life has to deteriorate, they think. That things are getting worse is an article of faith among liberals; it’s even a tenet of their faith. (If things are swimming along fine, what excuse is there for government intrusion?) You might even say that most liberals hate most good news. Prominent among the liberals’ permanent myths is the belief that Americans have become poorer except for a tiny minority of the very rich __________% (Fill in the blank.) In its most common version the idea is that Americans’ real standard of living has done nothing but decline since sometimes in the seventies. This, whatever the numbers say.

I, for one, know it’s not true. I was there, after all, from the beginning, even from before the beginning! I remember well how bad the good old days were in many respects. I am distressed that some people with apparently conservative or libertarian ideas have now also espoused this false belief. In this essay in two parts, I try to help readers find their way in the midst of often misleading or downright false statements that seem to support this erroneous belief. As usual, I do not address myself to specialists but rather to the intelligent but ignorant. Specialists are welcome to comment if they agree to do it in English or in some other official language.

Two forewords

1 I don’t contend that I understand what happened to American real incomes during the current crisis, say, between 2009 and 2013. I will say nothing about this recent period. (If I told you what I suspect happened, you might be astounded, though.) I refer in this essay only to the period 1975-2007.

2 I believe poverty and prosperity have to be measured in terms of real income, income as experienced by real human beings: It’s not how many dollar bills you have in your wallet, it’s what your paycheck actually buys that matters. This brings up several tough technical problems we will get into presently or in the next episode. If you think of poverty in different terms, I am not sure I have anything useful to say to you.

The superficial facts

General federal statistics, all OECD figures, all World Bank numbers show that on the average Americans have become considerably richer since 1975. Nevertheless, these statistics, contrary to a now common belief – significantly understate the economic progress of Americans. We, in general, have become vastly richer than were were then.

I will deal later explicitly with the issue of possible differences between what the average shows and the economic progress of sub-categories of the US population. In the meantime, I must point out that some common forms of enrichment cannot be confined to a particular group. Cleaner drinking water, for example, is usually cleaner for everyone. It would be impractical to reserve wells of dirty, polluted water for the poor or for racial minorities. (However, if you search a little you might actually find liberal allegations of such segregation or, at least, the intimations of such. National Public Radio is a good bet.)

Here is what I don’t intended to do, don’t do: I do not accuse government statistics of lying. I help others read them and complement them where they need to be complemented. There is not government conspiracy designed to mislead us about the living standards of Americans, I think.

Major (unintended) sources of bias.

There are three major sources of bias in expressing standard of living that understate, underestimate, understate economic betterment. I explain them below.

Ballooning health expenditures

Since the seventies, most employed Americans have taken most of their pay raises in the form of health benefits. This results from a historically accidental peculiarity of the American wage and benefit system going back to WWII. (It may be getting removed by the implementation of Obamacare as I write in 2013). The large increase in health expenditures provided by employers do not appear in wage statistics. Yet, they constitute consumption in a way similar to straight wages. In fact, wherever people are given a choice between more steak and more health care, they seem to chose more steak and more health care. Health care possesses an interesting characteristic all of its own: While there is a limit to how much steak an individual can ingest, there is no limit at all to how much health care -broadly defined – the same individual can absorb. It’s close to infinite. Why, I am considering right now some surgery to correct a nose I have not really liked for more than sixty years!

Whether it is a wise societal choice to spend apparently limitless resources on health care, much of it for the old and economically unproductive is an interesting issue in its own right. However, it’s not my issue here. Health services have been produced in vast quantities since 1975. They were eagerly consumed by Americans. Health expenditures constitute a part of the standard of living. If you don’t believe this, just ask yourself if the withdrawal of all health care would not be a lowering of the standard of living.

Better quality of common goods

Common objects on which comparisons of living standard across time are based have improved tremendously in quality. This is difficult, sometimes impossible to measure. Indices of comparison across time (1975 to 2007) don’t do a good job of it.

Nominal wages, the numbers printed on your paychecks, have to be corrected for inflation. We all know that a dollar does not buy as much as it did in 1975. (Around that time, my salary of $20,000/year was quite comfortable.) Federal international and private organizations in charge of these things do their very best to correct raw numbers in meaningful ways. However, they meet with several limitations because things of 1975 are often radically different from what bears the same name in 2007.

(Note: The agencies in charge do their best and mostly intelligently. Again, I am not faulting their efforts. Also, I think there is little intellectual fraud involved in this work because their results are among the most and best scrutinized in the history of the world.)

Here is an example: I suspect that the average television set of 1975 was like mine was then: It was small, offered only black and white images, often had scratchy sound, and gave access to little more than three national networks. Watching television then was like eating in a mediocre restaurant that offered only three dishes (and there was maybe a hot dog stand outside).

When economists correct for inflation, they have little choice but to compare that television set with a modern ultra-flat etc… Hence, when they report that the cost of a television set has increased in face dollars by, say, 100%, they are not able to take into account that the actual service (the enjoyment) attached to a contemporary set with precise colors, faithful sound that is a gateway to 300 sources is ten times, or one hundred times, greater than what I derived from my 1975 B&W set.

This example can pretty much be turned into a general rule: Everything is better, works better, tastes better, gives more service than its equivalent back then. When you find a seeming exception, you soon discover that it’s not real. Two examples of exceptions that don’t resist examination:

A     Cars are more expensive now than then by several measures. This means that it takes more days of mean (average) American wages to buy the cheapest car in American than it did then. But the cheapest car on American roads today are vastly better in every way than their supposed equivalent back then. They break down less often; they are safer (weight for weight); they require much less maintenance. (Older people will remember the days when every car required an oil change every 5,000 miles and when prudent car owners changed oil every 3,500 miles.)

In addition, much of the rise in real car prices is due to mandated safety and environmental buffers now built into them that did note exist in 1975. (It’s startling to see in not-so-old movies parents getting into the family car with their children and driving off with no one buckling safety belts because there aren’t any.) No matter how one feels about the current health and environmental restrictions pushing upward car prices, they are undeniably form of consumption. It’s useless to cry,” I don’t want it” when you imposed it on yourself through the political process you deem legitimate in every way.

B     Many older people, and I am often tempted to join them, believe that any number of produce just tasted better back then, produce such as tomatoes and strawberries, for example. This is pure delusion. Here is how I know: Several times, I have steeled my resolve, put cash in my pocket and directed my steps to the local farmers’ market. There, against all my instincts, I purchase a pound of organic tomatoes or a tiny basket of grossly priced strawberries. Now organic produce is not better for you (See “organic food” on this blog.) but it’s often fresher, and often handpicked. Each time, I recovered in my mouth the taste of produce of my youth. Each time, I did the calculations only to rediscover anew that the outrageous cost of the farmer’s market produce was actually less, as a percentage of any income, or in inflation-corrected dollars, than the equivalents did when I was young.

We have become used to paying little for mediocre produce, the better produce of yesteryear are still available. They are not even especially expensive. They appear expensive because we are spoiled by general low food prices.

An then, of course, there is the coffee. It was so vile then, coast-to-coast, in 1975 that if anyone but a drunks’ bar served it today he would probably be indicted. And then, there is bread that would have qualified as light construction material. The list is endless: In the good old days, most things were mediocre to very bad and they were, in fact expensive. Current measures are seldom able to take improvement in quality into account. For this reason, they understate average economic progress in America between 1975 and 2007.

I repeat that this average economic progress is also mostly widespread, available to all parts of the population. There are, in fact, few corner bakeries operating especially in the ghetto and specializing in nutritionally unsound, bad-tasting bread for African-Americans.

There may be an exception to the general rule that things have become cheaper in thirty years with constant quality I am not able to deal with here. It may be a major exception: Housing in all its forms may be more expensive in real terms now than it was in 1975. Much housing is the same now as it was then, so prices matters a great deal. Thus, better quality would not explain superior cost. I am eager to see sources on this issue and to publish them here.

New goods, new services

When comparing the prices of things and services then and now, economists are not able, of course, to take into account objects and services that simply did not exist then. This inescapable fact also understates the real progress in living standards. I repeat: Some good things are not counted at all in comparisons of the standard of living then and now because they did not exist at all then. This fact in itself constitutes an overstatement of the standard of living of then. The Internet and its many manifestations, its many subordinate services, such as Google, are a case in point.

I hasten to add that this judgment does not depend on how much you, personally value the Internet and its multiple offerings. To demonstrate that it’s a form of consumption, it’s enough to observe that few of those who can have access to the Internet actually turn it down. I, for example, like most residents of developed societies probably know more than one thousand people. Of the people I know, only three refuse to gain Internet access (and they periodically cheat by catching a ride on a relative’s network tool!)

I can hear some older readers grumble ( as one did recently on this blog) that newfangled technical innovations, such as the Internet and hugely better television, actually made life worse. I smile sarcastically inside for the following reason: Very few Americans seem to be following the primitivist dream implicit in such judgment and make for the wilderness. This, although it would be easy because there is probably more and more undeveloped, empty space in America as the population become more concentrated in a few mega cities. This is too has improved since 1975: There is more and wilder wilderness.

Summary

Large health expenditures, better products, more products have increased the general standard of living of Americans considerably beyond what wage and income statistics show. This statement is implicitly based on averages. The demonstration above does not exclude the logical possibility that some sectors of American society were worse off in 2007 than they, or their equivalents were in 1975. This issue is dear to liberal sensitivity. I deal with it in Part 2, soon forthcoming.

From the Comments: Debunking Myths About Islam and Violence

Jacques, a retired sociologist and university professor, has been repeating himself over and over again for the past fifteen years or so. His gripe? The imminent danger of Islam. Or Islamism. It depends on when you began reading him. Until recently, until the time that Delacroix decided to try and pick on me, Jacques’ venom was directed at Islam. Nowadays, it seems his poisonous arguments are directed at Islamism, the political movement. This is a step in the right direction. And yet, though his target his changed, his argument has not. The argument runs something like this:

  • Most, or much, of the violence in the world today is associated with Muslim groups of some kind or other.
  • Therefore, Islam, or Islamism, has an inherently violent penchant that needs to be removed using any method at the West’s disposal (including torture, a separate judicial system for Muslims suspected of being terrorists, and outright war).
  • In addition, Muslims who are not inherently violent (notice: Islam has an inherently violent penchant, except when it does not) are still responsible for terrorism because they do not snitch to government authorities when their fellow Muslims begin growing beards, and they do not speak out against Muslim extremists.

I have already gone the rounds with Delacroix on this narrative. He has been nothing but obstinately ignorant about his own argument, including the pseudo-facts that they rest upon. Maybe I shouldn’t be taken seriously. I’m just a lowly blog editor, after all, and a self-admitted libertarian to boot. The ‘comments’ of the two guys I’m about to highlight should be taken seriously, though. They are both college professors, and both do not self-identify as libertarians (though I think they are). Here is Dr Khawaja attempting to talk some sense into Jacques:

The first point is predictability versus explanation-in-retrospect, and I think you’re proving my point. I agree with your general account of the traits and biographical trajectory of terrorists. They’re often just as you say they are. The problem is, there are lots of non-violent losers with identical traits and trajectories, and no way to sort out the violent from the non-violent before the fact. The explanatory patterns typically emerge after the fact, which is when people tend to jump from explanation-after-the-fact to predictability-ex-ante. I guess I’m just flatly denying that the trajectory of the non-Islamist crazy is–in Western countries–all that different (ex ante) from the Muslim ones. The only “distinguishing” feature is that the latter are Muslim, and alienated from traditional Islam, and born again into something radical. But an enormous number of people have those traits, and simply waste their lives on being born-again Muslims of that sort without ever doing anything violent. My point is, when people–typically young men–start to move in that direction, it usually causes some concern. But “concern” is not the same as alarm at an imminent or even pending attack, and contrary to your suggestion, there is almost no way to predict those unless you’ve been taken into confidence by the would-be perpetrator. And of course, given what he wants to perpetrate, he’d have to be very incompetent to take a would-be snitch into his confidences.

Proviso: what I’m saying above refers to Muslims in Europe and North America. Things are different elsewhere. In the West Bank, if X’s brother, father, uncle, or cousin has been killed by the IDF, X is likely to commit a terrorist act, and if X becomes very religious, you can infer that he’s a member of Hamas. Similar moves are open to someone living in Pakistan. But those are different contexts than France of the US.

I’m not dogmatic enough to insist that the French cleric you quoted must absolutely be wrong. Maybe he has some way of detecting jihadists. But I really doubt it. The problem with French clerics of that sort is precisely their proximity to the government. They tend to speak with a view to pleasing this or that constituency, and what your cleric says is what the French government and people want to hear.

On immigration, granted that you didn’t literally come out and oppose all immigration by Muslims. But that isn’t quite what I accused you of, either. My point is: here we have a humanitarian crisis involving refugees who want asylum in this country. I’m the first to admit that if we admit a large number, some of this number will be terrorists and will perpetrate attacks on us that wouldn’t otherwise have happened (if we hadn’t let them in). My point is: now that we have this crisis, Americans have suddenly decided that a mass influx of refugees has to be constrained by border controls that would ensure that the mass influx remains a trickle. Imagine facing a potential influx of Syrian refugees and applying your stricture that none of them be Muslim literalists. By the time you operationalized that policy, and hired the border control staff to operate it, the year would be 2023, and the refugee crisis would be over. Or to take your other policy: can you really imagine teaching Syrian (or any other) refugees First Amendment law at their point of entry into the US? It can’t be done. It’s just not the way refugee operations work or can work. Imposing strictures like that on refugees is just a way of ensuring that the US never becomes a sanctuary during refugee crises.

I wouldn’t mind that attitude if only it were accompanied by a little bit of candor about history and politics. The US is committed never to become a large-scale sanctuary for, say, Syrian refugees. But now listen to the way politically conscious Americans talk about refugee crises elsewhere. The Arabs of Mandate Palestine were reluctant to open the borders of Palestine to European Jews? Well, that makes them anti-Semites. Common assertion: “The Palestinians remain in UNRWA camps to this day because the surrounding Arab countries, in their greed, refuse to take them in.” This comes from Americans who would never dream of taking them in. Israel, of course, has a very generous refugee policy (for Jews); that gets praise without any recognition that the refugees then function as demographic chips in the settlement game. West Bank settlements are full of Russian “Jews” who know less about the celebration of shabbos than I do.

Do I think the US has a Muslim problem? What makes the question difficult to answer is not any reluctance on my part to tackle the issue head-on, but an ambiguity in the phrase “a Muslim problem.” In one sense, it means “any significant problem stemming from Muslims.” In another sense, it means “a high priority issue facing the country as a whole and stemming from Muslims.” My view is that it has the first, not the second. There are several million Muslims in the country, and on the whole they don’t constitute a political problem. There are pockets of fanatics among them that do constitute a political (security) problem. France may well be different, but I think things are essentially in good shape in the US, despite this or that conspicuous Muslim atrocity.

To come at your question slightly differently: there is a sense in which Islam has a problem, the problem of reconciling itself to modernity. Given that, wherever you have Muslims who haven’t reconciled themselves to modernity, you’re going to get a problem (or problems). So yes, even if we had an isolationist foreign policy, that problem would remain. But that problem is least pronounced in the US, where Muslims basically run the same gamut as Reform to Conservative to Orthodox Jews. Literalist Muslims are no more (or less) a national problem than Orthodox Jews. I don’t mean to deny that they’re both a problem. But I wouldn’t say we have an Orthodox Jew Problem any more than I’d say we have a Muslim or Literalist Muslim Problem. Some places might, but we don’t.

Sorry, I said something confusing: “I don’t mean to deny that they’re both a problem.” I meant to say, “I don’t mean to deny that they’re both problematic,” i.e., give rise to problems. What I’m denying is that the problems are the equivalent of a high-level security threat.

Dr Khawaja blogs over at Policy of Truth and teaches philosophy at Felician College. Dr Amburgey tries to talk some sense into Jacques using a different angle:

“I said “probability.” It’s the concept we use, consciously or not, to approximate rational decisions in our daily lives: Select this birth clinic, rely on this baby food, travel by car, get vaccinated or not, go for this class rather than another. etc.”

I agree with Jacques. I’ll go further, I agree wholeheartedly with Jacques. I don’t subscribe to silly notions of human rationality like some of my colleagues but doing the best we can to make rational decisions is desirable both individually and in matters of public policy. As a consequence it’s useful to consider probabilities in our consideration of Jacques proposals.

Firstly, how does terrorism stack up against other risks in a probabilistic sense?

“Indeed – as we’ve previously documented – you’re more likely to die from brain-eating parasites, alcoholism, obesity, medical errors, risky sexual behavior or just about anything other than terrorism.”
http://www.globalresearch.ca/non-muslims-carried-out-more-than-90-of-all-terrorist-attacks-in-america/5333619

Even if we set aside the consequences of our choices [lifestyle or otherwise] terrorism is dwarfed by other things that kill us. Is it rational to spend more on the military than every other form of discretionary spending combined?
https://www.nationalpriorities.org/budget-basics/federal-budget-101/spending/

Secondly, given that terrorism is a risk how do different forms stack up compared to one another.
According to Jacques…

“We have terrorists of all inspirations in America, I know. The white murderer of black church people in Charleston was a terrorist, pure and simple. He was home bred and home grown. However, we have many, many more terrorists of foreign extraction, almost all with ties to Islam.”

This is, to put it politely, a counterfactual statement. The various public datasets have different observation windows and methodologies. Right now I’m going to use the 1980-2005 FBI data simply because there is a handy pie chart that I can copy from. In decreasing order…

Latino-42%, Extreme left-wing groups-24%, Others-16%, Jewish extremists-7%, Islamic extremists-6%, Communists-5%

The USA certainly has problems. Does it have a ‘muslim problem’? I’d say the numbers speak for themselves.

Dr Amburgey teaches in the business school of the University of Toronto. He doesn’t blog.

Jacques has still not addressed my questions regarding the implications of his policy proposals, by the way, namely that they echo those implemented by the Third Reich. Political Correctness is a corrupting influence on the free and open society (I suspect, in my infinite kindness and generosity, that Political Correctness is Jacques’ real target when he writes about Islam), but so is cultural chauvinism. Two wrongs don’t make a right!

Fourteen-Year Old Girl in Bikini Threatens Armed Cop

For those of you, my conservative friends, who believe police brutality is just a collection of deliberate made up tales, there is a video on the major cable networks today I hope you see.

It shows a normal size adult in a blue or black uniform putting his knee in the back of a fourteen-year old girl in a bikini to force her down. The girl is crying out for her Mamma. The same cop then draws his gun on a couple of teenage boys in swim shorts who are trying to help the girl. There are other teenagers around, all in swimming attire where one couldn’t hide a weapon. Does the cop think they are going to gang up on him and beat him to death? It’s difficult to see how his life is threatened. In fact, it’s impossible.

A private person gave a pool party on a hot day. Although I understand it took place in a semi-public pool, it was by invitation only. Predictably, some teenagers tried to crash the party. Someone called the police. At that point no blows had been struck; there may have been no violence. I say “may” because, according to some reports but not all, some girls had been pulling one another’s hair. The horror! Cat fights used to be considered free entertainment. The cops who first arrived felt out of their depth and apparently lost their cool and quickly became the worst threat to citizens‘ safety anywhere around.

This is the point where the media and everyone should ask the obvious question:

Suppose the cop had retreated and done nothing? What would be the worst case scenario. Answer 1: Uninvited teenagers swimming in a public pool that had been reserved. Answer 2: Possibly some hair pulled off. (When was the last time a teenage girl did serious damage to another with her bare hands? The stereotype is right: Girls don’t know how to fight.)

Is there an alternative universe where avoiding these calamities is worth brutalizing a young girl and pulling a gun on boys in bathing suits?

Is it even likely that the use of pepper spray was justified? Yes, I am double-guessing the cops on the scene. It’s becoming easier thanks to amateur video. If the cop who pulled his gun is unable to restrain himself or if he does not have the good judgment to do it, he shouldn’t be in charge of protecting us. Yes, that simple!

Was what I saw on the video a racial incident? I don’t think so although the main cop was white and the teenagers black. Likewise, when I see a white man sell a used tool to a black man at the flea market, I don’t think of it as a “racial transaction.” The assertion that white cops kill black men because white cops (and society in general) are racist is a simplistic idea invented and sustained by the scum sliver fringe of the dying civil rights movement to prolong its unearned privileges (including not paying millions of dollars in owed taxes).

I won’t believe that racial animus presides over the shooting of black men or any other kind of brutalization of black people by police until I see appropriate comparative figures: How many whites shot by white cops, how many blacks killed by black cops, etc. This would have to take into account the superior propensity of black to commit crimes. The number exists; the study is not difficult to do; any sociologist, any statistician could do it. The fact that it has either not been done or not publicized speaks to me of massive censorship, or self-censorship, of paralyzing political correctness.

The cop who put his knee in the middle of the back of a fourteen-year old girl may not be a racist; as I said; I think he is probably not. He just should not be a police officer. Given that he is a veteran, it’s not his training that’s defective, it’s him. Perhaps he should not have ever been on any force to begin with. Perhaps he has been on the job too long. If it’s the latter, I am guessing union rules prevent his superiors from doing anything about it or even from noticing that something is awry with that guy. Whatever is the case, the man is not a protector, he is a public danger.

He does not belong on the street with a gun but working in a church basement at something innocuous. His working buddies could be, for example, young women who think a smile is sexual harassment and a tap on the shoulder, rape. They deserve one another.

And, I can already hear it from my conservative friends: Peace officers have a tough job, blah, blah! You have to understand, blah, blah! Not so; the market tells the truth. There is is no shortage of police recruits nationwide. People are flocking to the job. The California Highway Patrol is currently recruiting young interns. Candidates must have no drug conviction (which does not make much sense if you think about it). They must have at least a 2.00 GPA in high school. Let me think, with grade inflation that would be a D- or an F+?

In the meantime, the Santa Cruz Sheriff is offering $5,200 a month for trainees with an immediate raise following graduation from the police academy. High school diploma required, or an associate degree. (There are also tests but…) Good time to weed out the inept and the used up. Or, the selection standards could be changed: You might go easier on the brawn and become more demanding on self-control and on ordinary common sense.

And, by the way, I hate affirmative action but…. (I hate it because it gave us among other things, the current Fascist-leaning administration that is also inept.) Yet, I don’t have trouble imagining that female cops may possess a superior ability to defuse potentially explosive situations. I believe that, in daily police practice, there are many cases where small physical size and low testosterone are assets.

There is no – I repeat – no reason to tolerate police brutality. Conservatives are morally bound to distrust the government there too. It’s our constitutional tradition.

PS I have no animus against police officers. My father was one, a good one. In my whole life, I have only had two moving violations; one was for driving too slowly.

Creeping illiteracy in the media: I heard with my own auditory ears and saw with my own visualizing eyes an MSNBC commentator refer to a “canine dog.” It makes me hunker for a “feline dog,” or even for an “avian dog.” That would be cool. Fortunately, it was on MSNBC, not on Fox.

Freeware

Similar to Brandon I’ve began playing around with new statistical packages. Like many libertarian scholars I have my skepticism about the limits of what we can learn from number crunching. I think there is a place for statistical analysis in the social sciences, but it is definitely meant to be a tool, not an ends to itself, and should be complemented with additional methods.

Recently I’ve begun trying to find a Geographical Information Systems (GIS). I had initially intended to buy a copy of ArcGIS, one of the dominant GIS packages, until I looked at their pricing plans. A single license for the basic version costs $1,500 USD. I’m sad to say this price tag is not abnormal. STATA, one of the larger statistical packages, sells an annual licence for its bare bones version at $125 USD. SAS has its pro version going for $9,000 USD.

What is abnormal is that several freeware packages exist that provide comparable services. Are you an undergraduate student taking a class on univariate regression analysis? Download Gretl. It has a menu based system that is relatively easy for even the newest of users to play around with. If you’re looking to challenge yourself opt instead for R.

Likewise, for those who like me are on a budget, there exists several freeware alternatives for GIS systems such as GRASS and QGIS. I’m still learning GIS so I can’t comment on either package, but I will be sure to provide reviews once I’m comfortable with them.

If several freeware alternatives exist, why do retail versions remain dominant in the industry?

Part of the answer is that corporations and universities value the customer help hotline if their software starts to malfunction. Poor graduate students don’t have much money, but tend to have a surplus of free time to use trying to figure out why their software isn’t working. Corporations have the opposite constraints, they have infinitely more money than graduate students but have much stricter time constraints.

Surely that can’t explain it all though, can it? If what you are purchasing with retail packages is the customer hotline, why haven’t a group of entrepreneurial (and hungry) grad students set up a business where they provide dedicated IT support for freeware? Several attempts have been made by Linux enthusiasts to provide such services for corporations looking to replace their Microsoft OS systems, so the idea has surely been thought of before.

Another possible answer is that what these retail packages are selling is their community. STATA may not be so technically superior to Gretl, but the former’s community is larger than the latter. If you have a problem with Gretl you can’t easily find another user to help out outside of a few niche forums. Meanwhile you are sure to find a STATA compatriot just by walking down a social science college’s halls. I am not really convinced by this idea though. There is a value to joining an existing community, but in the long run people do move across networks. Consider Myspace, which less than a decade ago was the social network, until it was defeated by another social network. How much longer will STATA and ArcGIS last before its user base migrate to R and GRASS?

What do you all think? What other reasons might explain why pricey retail statistical packages remain dominant over comparable freeware alternatives?

Can we count on juries?

Towards the end of this week’s Cracked Podcast an important issue was raised: juries are peopled by human beings and human beings are not naturally good at figuring out cause and effect. Over the last few hundred years the sort of evidence juries would have to evaluate were fairly simple; things like “does the glove fit?” (Okay, that’s a bad example.) But now juries are faced with expert witnesses discussing things like DNA evidence which requires a jury capable of interpreting statistical evidence. This is fine if the defendant has the money to hire their own expert witnesses, but for poor defendants they might well get railroaded by the ignorance of the jury. Is there anything that can be done?

Gracias, Carlitos

Me refiero a Carlos Bianchi, y el agradecimiento es por habernos enseñado cómo jugar la Libertadores; a los otros dos Carlos que lo merecen ya les corresponderá su post de agradecimiento.

Desde 2000, el record de Boca en la Copa es asombroso. Boca participó en 11 de 15 ediciones, llegando a la final en 6 ocasiones (55%); siempre pasó la primera fase, y sólo una vez se quedó en octavos de final (en 2009, contra Defensor Sporting). En otras palabras, Boca jugó los cuartos de final de dos de cada tres copas disputadas entre 2000 y 2014, y pasó en 6 de 7 semifinales (86%). Para poner esos números en contexto, de los otros 10 equipos que participaron en 9 o más ediciones,* únicamente Peñarol llegó a la final, en 2011 (perdió con Santos). Además de Boca, sólo Inter de Porto Alegre (ganó 2 de 2), Sao Paulo, Santos y Olimpia (1 de 2) llegaron a la final más de una vez.

Una forma de examinar esos números con un poco más de rigor es estimar la probabilidad de que un equipo llegue a una determinada instancia (Final, Semi, Cuartos, etc) dadas ciertas variables, como su desempeño en la primera fase o su país de origen. Para ver si ése es el caso, estimé una serie de modelos probit ordenados donde la variable dependiente es la posición en que cada equipo terminó en cada Copa (Campeón, Subcampeón, Semifinal, Cuartos u Octavos). La muestra comprende todos aquellos equipos que llegaron a octavos de final.

Los modelos 1-3 muestran que los equipos a los que les va bien en la primera fase generalmente llegan más lejos, y que el total de puntos obtenidos es más importante que ganar el grupo. Por supuesto, ambas variables están correlacionadas–en promedio, el primero del grupo le saca tres puntos al segundo–, pero a los mejores primeros (y, presumiblemente, a los mejores segundos) les suele ir mejor. El modelo 4 muestra que incluso controlando por la cantidad de puntos obtenidos en la primera fase, los equipos argentinos y brasileños son más fuertes que el resto–lo que es de esperar si consideramos que casi 3 de cada 4 finalistas (22 de 30, ó 73%) vienen de Argentina o Brasil. Sin embargo, el último modelo revela que más que un “efecto Argentina”, lo que hay es un “efecto Boca”: cuando incluimos un dummy para Boca, los equipos argentinos ya no son tan buenos en comparación al resto, pero Boca sí lo es.

TablaGraciasCarlitos

El gráfico de abajo ilustra la magnitude de ese efecto. Las barras indican la probabilidad de que distintos equipos lleguen a una determinada instancia de la Libertadores, dependiendo de su país de origen y el número de puntos obtenidos en la primera fase. Podemos apreciar cómo los equipos que no son argentinos ni brasileños (y los argentinos que pasan con sólo 10 puntos) tienen muchas probabilidades de quedarse afuera en Octavos; asimismo, la diferencia entre un equipo brasileño y uno argentino que no sea Boca es de alrededor de 3 puntos. Pero nada se compara con el Boca post-Bianchi, cuya probabilidad de ganar la final es la misma que la de un equipo brasileño de llegar a semifinales–y ni hablemos de pasar las primeras dos fases.

BocaLibertadores

(*) Los otros equipos que participaron en 9 ó más ediciones son Nacional de Montevideo (15), Cerro Porteño y Libertad de Paraguay (11), Bolívar, Emelec, River, Vélez (10), Caracas, Peñarol y The Strongest (9).

(Publicado originalmente en https://elpaisgeneroso.wordpress.com/)

Questions about R

And lots of ’em.

I just downloaded the R package from the CRAN in Seattle. I haven’t opened it yet. I don’t even know what CRAN is. I’ve been gathering some data on the GDP (PPP) per capita of regions in the world and I want to tinker with them, but I also want to get familiar with a stats program.

Any help with the fundamentals of what I’m dealing with would be great. Thanks!

UPDATE 12/18/2014: Michelangelo has steered me away from R and into the loving arms of gretl:

I prefer gretl to R because the former has a menu-based interface. R, Stata, etc. on the other hand require you to now how to ‘code’. There are menus in the latter, but I don’t find them user friendly. The coding is hardly hard, but I think it confuses people who are just starting out and it isn’t really worth coding if you’re doing it for fun.

Unemployment is Completely Unnecessary

In U.S. government statistics, a person is unemployed if he is 16 years of age or more, and that person is able and willing to work at prevailing wages. The labor force includes the employed and the unemployed. If one is not employed for wages because one does not wish to work or to seek work, that person is not in the labor force, and not counted as unemployed.

The unemployment rate in the USA is now about six percent, down from a peak of ten percent in 2009. About one percent of the labor force is in “frictional” unemployment, meaning that the worker is between jobs or recently graduated from school and engaged in job search, or about to be hired. When the economy is depressed, there is “cyclical” unemployment, those not working as firms reduce employment. There is also the “structural” unemployment of workers losing their jobs in declining industries, and the seasonal unemployment of those employed only during a season such as in resorts or during harvests.

An economy is in full employment when the only unemployment is frictional. The economic puzzle is why there is any other unemployment. Cyclical unemployment is no mystery, as firms have fewer sales as demand falls, and falling demands become a downward spiral as falling purchases by some become falling production by others. The recession ends when materials prices and real estate rentals have fallen so low that production becomes profitable again.

Since recessions are caused by monetary and fiscal subsidies, a pure market economy would have neither, so it would have no recessions and no cyclical unemployment. So the puzzle consists of chronic unemployment, those unable to obtain work even during prosperous times. Most of the unemployed have been out of work for months or years. Those long unemployed have even more difficulty finding employment, because employers wonder why that person can’t find any job.

Some economists consider idle labor to have a positive side. You car is not wasted when you don’t use it, because it provides the service of availability. Empty seats in a theater have value because the theater needs that capacity for popular shows. Likewise, in this viewpoint, idle labor provides workers when firms need to hire. Also, the unemployed need time to engage in job search, so they are busy even if unemployed. But one can be employed at least part time while looking for better work, and while idle labor may be good for employers, it is bad for workers who need the income, and for taxpayers who have to support those not working.

In a pure market economy, there would not be any unemployment at all. There would be no seasonal unemployment, because workers could find other jobs in other seasons. There would be no structural unemployment, because workers could shift to other industries, and work in temporary jobs while searching for full-time employment. Even workers in frictional unemployment would be able to work some of the time, since job search is not full-time.

One of the premises of economics is that human desires are unlimited. There is always a demand for something. That demand provides an opportunity for workers to be employed to satisfy that desire. In a pure market economy, one could also be easily self-employed. Any person who is not totally incapacitated would be able to offer some service at some wage. If the wage one can obtain is too low to bother with working, then that person would not wish to work, not be in the labor force, and not be unemployed.

Unemployment exists because there are barriers that prevent labor from having access to land and capital goods. If the cost of hiring a worker is greater than his productivity, he will not be hired. In a pure market, the wage would be set where the quantity of labor supplied by workers equals the quantity demanded by employers.

Government policy raises the cost of labor above the pure market wage. Minimum wage laws prevent employers from hiring the least productive workers. On top of the minimum wage are imposed costs: the employer’s share of payroll taxes, mandated medical insurance, worker accident insurance, and the unemployment compensation tax. The firm also has to withhold taxes from wages and send then to the government. There is also a litigation risk and cost of hiring labor, as labor laws promote excessive litigation to combat malpractice, discrimination and sexual harassment. Also, union labor monopolies, and laws favorable to unions, push up the wages of union workers at the expense of less employment. Finally, laws making it costly to fire workers raise the cost of hiring them, creating more unemployment.

In a full-employment economy, when firms seek to expand, they would pull workers away from other firms, or pulled into the labor force, by offering higher wages and better conditions. There is no need for idle labor.

The best policy for labor is full employment. Labor laws that seek to protect workers end up imposing barriers that prevent employment. Full employment requires hiring flexibility and the removal of government-imposed costs. Full employment requires the elimination of taxes on labor, exchange, production, and consumption. Public revenue from land rent or land value could replace all these labor-hampering taxes, while promoting the productive use of land which would further increase wages.

A shift in taxation from labor to land would both increase employment and increase wages, while letting the worker keep his wage. It is not unemployment that is a puzzle, but rather why workers are not demanding the abolition of their wage-tax burden.

Climate Change and Flat Earthers

“There has been no universal trend in the overall extent of drought across the Unites States since 1900.”

“Trends in severe storms, including the intensity and frequency….are uncertain and being studied intensively.”

Both quotes are from the fine lines in the 829-page quadrennial National Climate Assessment. That’s the report Pres. Obama flogged on national television recently for nearly an hour. The president insisted something had to be done right now.

I have not read the report, of course, why should I ? (See below.)

(The first quote is in the report according to a Wall Street Journal editorial on 5/9/14. The second is in the report according to my frequent reader and commenter McHenry. He is a young man who does, or used to, believe in the threat of man-made climate change. He has good scientific training.)

A few months ago, when the Great Lakes were 90% frozen, that great scientist, Secretary of State Kerry relegated me to the ranks of “Flat Earthers.” He did this because I am very skeptical (and growing) of the climate change thesis. (See definition below.)

Of course, anyone who has been observing him from his political beginnings knows that John Kerry has no scientific competences, no competences about anything at all, except windsurfing and marrying rich widows. (I don’t knock either, no sir!) It’s also possible that he knows some French. That would tend to contribute to his misinformation, I think.

I suspect, in fact, I am almost sure, that Mr Kerry’s self-assurance is based on the belief that 97% of scientists, blah, blah, blah…

The climate change thesis deconstructs as follows:

1 There is a global rise in temperature.

That’s from some undetermined date. Hasn’t been any for the last fifteen years according to federal government’s own reports.

2 It’s caused by human activity.

This includes the burning of fossil fuels, of course but yet, there is no call for an increase in nuclear energy production which is a reliable and lasting way to relieve worldwide reliance on fossil fuels. No reason is ever given for this absence. Sometimes, perfectly serious climate change partisans also include among the causes of man-made global warming belching and flatulence by the large worldwide cattle population. The latter “cause,” of course, calls for a quick conversion to vegetarianism. (That is where secret evangelists show their hand.)

3 The world, or parts of it, or us, or some of us, are in imminent danger of a variety of catastrophes that will be caused by climate change.

Note that the three propositions are logically linked: If there is no global rise in temperature, we don’t care about human activity. If human activity does nothing to the globe ( to what, exactly?) there is no emergency. If there is a global rise in temperature and it’s not man-made, there is not much we can do. If there is global warming and it is the result of human activities and it does no harm, there is nothing we should do. If it does both harm and good (longer growing seasons in the north, access to minerals near the North Pole) then, there is something important to discuss internationally.

As the evidence in support of the thesis becomes more complicated and contradictory, the alarmist cries are becoming shriller. This makes a sort of macabre sense. Simple rationality is getting lost along the way. What we are told about urgent policy requirements does not fit with the evidence that is presented by the same people who demand urgently a new policy of de-industrialization. The climate change book is like a novel whose cover would proclaim “Joe Is the Killer” while the inside pages would sow doubt on the idea that Joe has ever killed, or even harmed anyone, has ever so much as spat on the sidewalk.

Sometimes, downright fraud is also prominently involved. That’s the case for the “97% of scientists” that I think certified incompetents like Sec. Kerry rely on. Personally, I have always known and said that there was nothing to the number. There is no 97% of anything anywhere, except in some banana republics and in North Korea. Now, we have good evidence of fraud on this matter.

In past postings on the climate change or global warming, I have been at great pains to declare, even to prove my ignorance in matters of climate science. I did this because I wanted to step resolutely away from jargon-filled experts’ and pseudo-experts’ discussions that can only befuddle people who have to make a living, rear children, prepare their taxes, pay a mortgage, go to the gym.

In fact, I have fair general scientific training: I easily recognize a good study design. (They don’t grow on trees!) I can spot bad measurements from a mile away, like a jealous wife a single long hair of the wrong color on her husband’s lapel. I also possess a skill that is rare in the general literate population but common among those who have acted as referees for scholarly journals: a keen sense of studies’ formal conclusions that shout when the findings would only merit whispering.

Note that I don’t claim I have ever committed this last little sin myself when I was a scholar. It’s damned tempting though. How can you admit, “Yes, I and two colleagues worked hard on this study for three years and, frankly, what we found does not amount to a hill of beans.”

And then, there is the vertiginous, nightmarish situation where you would have to report, “The consensus is that X causes Y. Our study, carefully conceived in every way – go ahead and check everything – suggests that X does not cause Y.” This is like yelling, “Go ahead, don’t publish my study!” (I actually published two such studies in my time, one at the beginning of my career, one at the end. The last one took twenty years! See on my vita linked to this blog: Delacroix, Jacques. “The export of raw materials and economic growth: a cross-national study.” American Sociological Review. 42:795-808. 1977. Delacroix, Jacques and François Nielsen. “The beloved myth: Protestantism and the rise of industrial capitalism in 19th century Europe.” Social Forces 80-2:509-553. 2001.)

There is also a general, well known anti “negative findings” bias in all scientific disciplines. Few journals have the intestinal fortitude to publish articles that proclaim: “We did not find anything.” I doubt that the climate sciences constitute an exception. Do you?

Here is a fictitious but realistic example of such a conclusion:

“Humans have been pumping ‘greenhouse gases’ into the atmosphere with increasing intensity* for one hundred and ten years and yet, there is no rise in the frequency of droughts.”

How does this work for your career, do you think?

Here is an example of bad design, specifically.

Several years ago in one of the respected American scientific magazines there appeared an article authored by three Australian professors with impeccable scientific credentials. (I am very sorry I don’t have the reference. However, my memory forgets but it does not make up stuff.) The article purported to tackle the issue of long term global warming. It was an attempt to recoup after the disaster of the “hockey stick scandal”** which involved downright cheating.

The issue is this: If it was warmer in 1000 that it is today, it’s hard to argue that gases specific to industrial societies are an exclusive or even a primary cause of global warming. (It’s difficult but not impossible; it would involve heavy scientific lifting.)

Anyway, that article relied on one form of measurement of temperature, tree rings, I think, for the longest period, extending from about year 1000, to about year 1800. Then the authors switched to other, probably better, more sensitive measurements, based on other than tree rings, for the period extending from about 1800 to the present.

That’s impossibly bad scientific design, of course. Here are the reasons. If the first measurement somehow underestimates temperature then, it’s necessarily true that temperatures in the other period from 1800, will appear higher. If the second type of measures somehow overstates or simply detects more accurately high temperatures, the years 1800 to present will necessarily seem warmer. Both false effects would tend to be seem true irrespective of the real temperatures in both periods .

It tuns out that 1800 to present is the period of interest. If you are going to prove a sharp rise of temperature coinciding with industrialization, you have to demonstrate a big uptick for that period . The design is thus not neutral with respect to results. It favors some rather than others.

It’s such breathtakingly bad design that I had to read the article twice to believe it. (That’s what caused me to check the authors’ academic credentials. As I said, they were excellent.)

The alert reader will have noticed that the potential bias I describe above can work either way: If the measurements to 1800 overestimate temperatures while the measurements from 1800 to present happen to underestimate temperatures, you may find that you have demonstrated that there is no warming that corresponds to the industrializing period although one exists. You might even show that temperature has declined on the whole although it has actually risen.

Now, suppose that the study of reference showed precisely either no change or change in the “wrong” direction. That would be no change in global temperatures, 1000 to 2000, or a slight decline of temperatures beginning, say, in 1810.

My educated first guess is that, in the intellectual climate of the past fifteen years, the authors would not then have presented their research for publication. My second, also well informed guess, is that if they had presented it, the journal editor would have turned them down. He would have turned them down irrespective of his religion toward climate change. That’s because, journals don’t like negative results of the form: “Nothing happened.” See above.

That’s in addition to the fact that many editors are members of the same intellectual class that has lost its way on climate as it lost its way previously on communism and on Third World revolutions (another story I plan to tell soon on this blog).

In conclusion: Our current system of scholarly publication almost guarantees that there is little chance that scientific findings of high quality that contradict the belief in the thesis described above will see the light of day. It does not take a real conspiracy to arrive at such a situation, just the perpetuation of well-established bad habits.

How about the three credentialed Australian professors who committed the dramatically faulty research design? Are they scum? That’s were religion comes in. It’s helpful in pretending that the bad actions you commit are not really sinful. Did you know that the crusaders who captured Jerusalem in 1099 put all its inhabitants to the sword while shouting “God wants it”?

So, OK, I am a Flat Earther. It’s not so bad, really. One of these days, I will figure out the truth by noticing that no one ever falls off the earth, no matter how far he travels. I might even figure out why some get back home simply by moving in a straight line. Paying attention to negative evidence like this pays off. On the other hand, those who live inside a square box will never learn anything. Their blindness is dangerous for everyone.

* I don’t know the actual numbers but I would be surprised if we did not, collectively, burn one hundred times more than we did in 1800. One thousand times would not surprise me, not even 10,000 times.

**Look it up. Great story!

From the Comments: Open Borders and Substantial Increases in GDP

Dr Delacroix gives us a great review of the most recent literature on the relationship between open borders and substantial increases in GDP (50%-150%):

A Long Comment on The Big Thing (open borders)

Thank you, Rick, for causing me to read this very good paper (and thanks to Brandon for making it easily available). I did not find the 150% increase in GDP you promised . That’s OK because it helps me point to one weakness of this paper that should be relevant to any discussion of emigration/immigration focused on policies. The author seems to have been unable to extract from the others articles on which his is based any coherent time dimension. A temporal dimension seems to be lacking. When discussing public policy it ‘s always necessary to consider: “In the short run, in the long run.” An increase of world joint GDP of 150% in fifty years thanks to relaxed immigration seems plausible; the same rise by next year is out of the question, of course.

On several issues, the author comes close to confusing “absence of evidence” with “evidence of absence.” This may be fine for a scholarly article in the discipline of economics. Difficulty to measure or to act upon should not constrain blog discussion however. Five things.

1 “Begin with the country of origin. The departure of some people such as the skilled or talented from a poor country might reduce the productivity of others in that country.”

“might”?

Qualitative differences between those who emigrate and the population of origin may be very large: This is “cream of the crop” vs “bottom of the barrel” issue. This should be obvious with respect to easily measured age and health status for example. The young and stalwart go first. It may be as true with respect to difficult to measure but obviously existing qualities such as the propensity to take economic risks, for example. Thus, I would be surprised if current Mexican illegal immigrants to the US where not economically more desirable immigrants than their own siblings of the same sex who stayed put. I mean more desirable from my viewpoint, someone who is already inside a country of destination. The risks the illegals took to move act like a beneficial sift in this respect, it seems to me.

Periodically African immigrants drown off Lampedusa in the Mediterranean just for a chance to set foot in the EU where medial jobs expect them. They all have close relatives living in the same economic circumstance at home who did not join them.*

The author calls these considerations a kind of externalities and mentions that they are difficult to measure. Difficult to measure does not mean non-existent; it does not even mean small, as he implies. Passion is also difficult to measure, and so is the wrath of a woman scorned. Neither is small in any sense of the word. Stuff that you do not enter into the equation does not show up in the results except in an unclear, residual sort of way. Those who should be in charge of measuring them, the government bureaucracies of countries of origin, are often inept, corrupt, uninterested or discouraged from doing so by government that prefer slogans to facts. Yet, that’s no reason to write these thing off from our thinking.

2 Author asks sensibly:

“Is productivity mostly about who you are, or where you are?”

Productivity clearly has a lot to do with where you are. (Take a man’s shovel in Sonora, teach him how to drive a backhoe in Brooklyn….) I don’t know what the proportions are between it and the answer to the “who” question but I think it would be absurd to set the “who” at zero. Even national origin may matter on the average: If you absolutely must choose between an unknown Englishman and an unknown Frenchman for a cook, which would you chose?

3 Author is too quick to dismiss the argument of impoverishment caused by emigrants’ departure in their countries of origin. He even uses a logically flawed argument, I think:

“But if human capital externalities from health workers were a first order determinant of basic health conditions, African countries experiencing the largest outflows of doctors and nurses would have systematically worse health conditions than other parts of Africa. In fact, those countries have systematically better health conditions (Clemens, 2007).”

Or, is it more likely that: African countries possessing quality health personnel training programs enjoy superior health conditions as a result (I am thinking vaccinations) and some of the health personnel they train are employable in rich countries.

By the way, this raises the general problem of losing at – least temporarily – the benefits associated with the cost of rearing labor. When a Filipina arrives in the US at 19, ready to work in a hospital, the fact is that I contributed nothing to the cost of bringing her up to that point. Someone else has, in the Philippines, most likely. It’s possible that on the average, the home remittances of such immigrant workers more than covers the cost of rearing and training them. I don’t know if it’s true, or how often. I would like to find out.

Author’s savant discussion of externalities seems (seems) to conclude that even if there is a loss to the country of origin, not much can be done. Of course, something can be done: Let the country of destination pay fees to someone or something in the country of origin that supported the cost of training the immigrant worker; in other words, re-imburse at low cost the expense incurred in creating an unearned benefit in the country of destination.

4 Policy makers in Europe are much exercised over the “lifeboat effect.” Even if immigrants’ arrival results in superior economic growth, even if it solves long term problems, as in Social Security, a sudden influx of large numbers may quickly overwhelm destination societies. It may markedly lower their standards of living. (Think of elementary school classes suddenly crowded with children who don’t know the teachers’ language.) I did not find that this article deals with this matter except between the lines, in an implied manner.

[Wholly theoretical Figure 1 does not help me with this although I am attracted to its curves.]

5 Author does his job as an economist well. He writes about the economics of emigration/immigration and he reports on solid research within the constraints of the discipline of economics discourse. But here are also political consequences of immigration we are free to discuss on this blog. (That’s what blogs are for, I think.) This is especially true for a libertarian blog because it poses squarely the problem of national boundaries, of the respect they are owed or not, of their convenience or inconvenience vis-a-vis libertarian aspirations.

Political consequences of immigration loom large in the imaginations of many people in the countries of destination. The manifestations of their concern are not all vacuous or ignorant, or hysterical. The 8 million Swiss -including many immigrants – may have good reason to wonder how many people they can absorb who think that separation of church and state is not only a bad idea but a major sin. Many French people of old French origin are openly racist. Among those responsible French people who are not racist at all, it’s common to worry about the short-term consequences of the legitimate burden high fertility immigrants place on their already sinking welfare system. (The high fertility is documented; it’s not a rumor.) Many American conservatives are worried about Mexican immigrants’ high propensity to vote Democratic. In the end, it’s possible to imagine a scenario where, in combination with other factors,** Mexican immigration helps turn the United States become a one-party state for all intents and purposes. Incidentally, I like Mexicans and I think they make first-rate immigrants. See my co-author articled with Nikiforov on my – Facts Matter – blog.

Sometimes, author handles humor a little too lightly: “Mayda (2006) finds that it is the wealthier, better educated, and less nationalist individuals in rich destination countries who have more favorable attitudes toward immigration.” Sure thing, I am thinking! They want a steady supply of maids and gardeners.

* As some readers already know ad nauseam, I am an immigrant myself. I had four siblings brought up in pretty much the same micro and macro environments as I. They all shared my mediocre level of educational attainment (high school or less). Three of my siblings never tried to move to a richer country as I did; another tried and failed. The difficulties inherent in emigration must select in favor of the desperate, the brave, and of the sociopathic. (Ask me for a good recent book on the latter.)

** The Republican Party’s current striking political incompetence (small p) looms large on my mind as I write this

Seven Ways Libertarians Sometimes Run Off the Rails

I’m a dedicated libertarian but my first allegiance is to accuracy.  It pains me when I see libertarians making arguments that are inaccurate, irrelevant, or just plain wrong.  When they do so, they do themselves and our movement a big dis-service.  I list seven such arguments here.  More could be added.

  1. The Fed is privately owned. This is true only superficially. Member banks own shares of stock in one of twelve district Federal Reserve Banks and they receive dividends on those shares. But they have little in the way of genuine ownership privileges. They cannot sell their stock and their voting rights are very limited. The President of the United States appoints the Board of Governors. Just because a legal arrangement is given labels that suggest private ownership, that doesn’t make it so.

  2. The Bureau of Labor Statistics disguises the true unemployment situation by excluding workers who are “discouraged,” i.e., not seeking jobs. This is true of the U-3 unemployment figure which is the most widely cited figure, and the one the Fed says it is targeting. That figure is currently about 6.5%. The BLS also publishes its U-6 figure, which includes discouraged workers and currently stands at around 13%, down from about 17% at the height of the Great Recession. The BLS is not covering up anything here, although politicians may certainly choose to emphasize one figure or the other depending on what ax they’re grinding. Which is the “true” unemployment rate? There’s no such thing. The figures are what they are and observers can make of them what they will.

  3. “Chain-weighted” versions of the Consumer Price Index are politically motivated.  These adjustments are intended to recognize the substitution effect, the classic example of which is when the price of beef rises and the price of chicken doesn’t, people eat less beef and more chicken. Peoples’ cost of living rises less than it otherwise would. CPI increases as measured by a chain-weighted formula reflect this fact, and the resulting price inflation estimates come out lower than under the old approach. That flashes a green light to some conspiracy theorists. While these adjustments are tricky business, substitution effects are real and the attempt to compensate for them should not be impugned.
  4. The Consumer Price Index is politically manipulated by excluding food and energy. There are many versions of the CPI. One of them excludes food and energy because those prices are usually very volatile. That figure may be useful to economists who want to filter out volatile effects and focus on secular trends. Again, the figures are what they are, and politicians or for that matter we bloggers can use or misuse them as we wish.

  5. “Banksters” control the U.S. government. There is a grain of truth in this one. The big banks are both victims and beneficiaries of government dominance of banking and finance. The reality of government regulation is that regulated firms employ many very smart and very well paid individuals who are constantly finding ways to manipulate or sidestep the regulations to which they are subject. The fact is that the regulators and the regulated are very thick. Banking and finance are controlled by a cabal of government and Wall Street firms and individuals. It’s a mistake to say that either group totally dominates the other.

  6. Global warming is a myth and a scam. Ron Paul, whom I admire very much, blotted his copy book when he said on Fox News, “The greatest hoax I think that has been around for many, many years if not hundreds of years has been this hoax on […] global warming.” A few basic facts are beyond dispute: (a) carbon dioxide is a greenhouse gas, (b) CO2 levels are at an all time high, and (c) human activity is the primary cause of the increase. Beyond that, the evidence starts to get sketchy and incomplete. We do seem to have melting polar ice caps, record high temperatures in some places, droughts, etc. But overall there has been almost no temperature increase during the last ten years or so.  Projections of rising temperatures and rising sea levels appear to be too pessimistic. This is a very complex issue and one where biases can overwhelm us if we aren’t careful. Statists are prone to accept the global warming thesis because they see it as a way to increase state power. Libertarians want the issue to go away for the same reason. This would be a great time for all parties to step back an exercise some epistemic humility. There’s a great deal about this issue that we just don’t know.

  7. Let’s get rid of the state entirely, and all will be well. Given the present primitive degree of evolution of our species, a new state will pop up wherever an existing one is overthrown. The key to peace and prosperity is not anything so simple as abolition of the state, but to convince enough people, thoroughly enough, of the advantages of long-term cooperation. Good institutions will follow.

Inequality: the Solutions

There is going to be talk of inequality for three straight years. It’s the Obama administration’s strategy to help voters forget the horrors of the implementation of Obamacare. (It’s not optimistic about the rest of the plan either, it seems.) Of course, the word “inequality” resonates well with young people who have been impoverished by the administration’s bad policies since the current economic crisis (which it did inherit). When you can’t get a job, nearly everyone is better off than you are, and inequality is concrete.

Besides, you can always find inequality somewhere by cherry picking: Since 1990, the top ten per cent have increased their share from X to Z while the bottom 17% have seen their share decrease by W; since 2001, the top twenty percent have grown their share from M to P while the bottom 50%, blah, blah, blah. See what I mean? The only situation where you cannot find inequality is when everyone one, every person, every household has exactly the same as every other. This would be hard to achieve if you tried, because people would become unequal again at one end (on the one hand) before you had finished at the other end (on the other hand).

Yet, it turns out, it’s not difficult to do something concrete and decisive about inequality of income and/ or of wealth on an individual basis, through personal initiative. (Inequality of looks is a tougher proposition.). I advise how below.

First, if you are rich, you can easily dispose of your share of the social burden of economic equality. Just give away your money until you reach a median position or below. If you can’t help but earn more money, just keep giving it away. Problem solved.

Second, if you are poor, just decide to become Steve Jobs, or Bill Gates, both multi-billionaires who started from nothing. If that’s not your cup of tea, just become a millionaire athlete or actor. If that won’t work, and speaking of tea, start a Starbucks for teas. Hurry up, Starbucks itself is doing it right now. Don’t blame anyone: You had more than twenty years to take the initiative.

In general, the healthy poor in American have a lot of explaining to do. Go ahead, explain.

If you fear you don’t have the talent, or the education, or anything to help you qualify to do any of the above, here is a plan:

In every developed country including the US, there is a chronic shortage of plumbers, has been for at least forty years. One plumber I employed about ten years ago was grossing $60/hour. That was although his phobia prevented him for working in dark confined places. (Would I make this up?)

My suggestion is that you should apprentice yourself to a plumber for a year or so. After that span of time – which you might finance through a loan, don’t be shy, go right ahead – go into business for yourself. Plan for thirty hours a week of actual work because you need time to relax and a little time to get organized and to do the billing. Take a French-style one month vacation each year. Charge as much as I was willing to pay the phobic ten years ago, $60/hr.

You should gross about $85,000 a year. Count $15,000 for taxes and other deductions if you insist on keeping books. You are left with $70,000 to spend. According to the Census bureau, the gross household US median income was under $52,000 in 2011. It’s probably not much higher now. Since we are comparing net to gross, these elementary calculations put you actually well ahead of the average. And, remember, we are comparing your projected income to the median household income. So, under my plan, your spouse need not be gainfully employed.

With this kind of income, if you are that kind of person, you should be able to salt away in savings $5,000 each year. Placing the savings at a safe 3%, you re likely to be able to give your children something like $140,000 after only twenty years. Nice down payment on a house in California, nice house in Arkansas, even with inflation. Yet, more choice!

If you end up finding your superior plumber’s income distasteful because it violates your belief in equality, see above. Or you might just decide to work less each week or to take longer vacations.

On inequality, see also: “Equality and Fairness“.

Any questions?