Category Archives: Economics

How Do You Measure The ‘American Dream?’

Class Mobility, Cronyism, Economics, Education, Fiscal Policy, Taxation

The question of class mobility has come to define the “American Dream” in political discourse. And, although this post will take a bit of a contrarian position, it is absolutely inarguable that there is a problem with economic immobility today that is having a very depressing impact on the way we communicate to solve problems and on our freedoms in general. But this is not how you go about making that point.

There are many accepted indicators of whether a person has “done everything right” but the most important such indicators have traditionally included college advancement (graduation and especially graduate degrees), marriage, and home ownership.

The original graphic is a classic example of a complex topic simplified into uselessness. When I look at the graph, I see that, in fact, college grads who started poor move up to the middle classes and stay there at much higher rates than rich kids who drop out of high school (yay!)…but somehow the Post comes away with the misleading headline: Poor kids who do everything right don’t do better than rich kids who do everything wrong.

Really? This only looks at the shear proportions who “graduate college” vs. “drop out of high school” – that can hardly be seen as “doing everything right” vs. “getting everything wrong”. What did the college grads major in? There is ample research supporting the conclusion that most college majors these days are bad long term investments. What did the rich kids who didn’t finish HS go on to do? Were they drop-outs because they had alternative plans? Did they pick up a trade?

And more to the point – how many of those poor kids had good parenting examples at home upon which to build the foundations of healthy marriages?

Slate takes on many of my same talking points here. They mention other confounding factors, and note the misleading nature of the Post’s article title. Props to them!

But they make the unfortunate logical leap that there is something inherently wrong with a system where not all poor college grads do well later in life, or that the forces leading to their remaining in poverty are things we can fix.

An excerpt:

The real issue, as O’Brien points out, is that rich kids enjoy lots of advantages that keep them from falling to the very bottom of income distribution, and sometimes those advantages keep them at the very top. They might be able to go to work for family businesses, for instance, or family friends. Researchers like Brookings’ Richard Reeves call that collection of advantages “the glass floor.” Educated poor kids are in the exact opposite position. Many attend second- or third-rate (and possibly for-profit) colleges that churn out less-than-useful degrees. And instead of a floor propping them up, their families and friends can act like an anchor pulling them down. A classic example: a college-educated woman who goes home and marries a boyfriend who never made it past high school and has trouble holding down a job.

Emphasis mine. Notice the not-so-subtle insinuation that colleges that operate for profit are bad for the poor, and that the less-useful degrees are not to be found in the halls of elite, expensive colleges, only those second rate low-end state schools or the aforementioned dirty capitalist institutions. Of course, even top end colleges (including the ivy leagues) are now offering degrees in a wide array of financially useless liberal arts curricula. Also notice the suggestion that the problem isn’t with the failure of people raised in poverty to establish and keep stable families, but that those families are holding them back. They’re getting it exactly backwards. Every credible study on the persistence of poverty finds that single parents and people who suffer divorce are the most likely to get stuck in poverty.

So let’s summarize the position of Slate’s team (and likely that of the Washington Post):

1) Economic mobility continues to be problematic at best for the poorest Americans, even with hard work.
2) Graduating from college is a mark of hard work.
3) Hard work should be rewarded with a high rate of success.
4) If we could separate the poor from the things that hold them back (especially their struggling families and their alternative education sources), they would thrive.

If the writers at Slate would like to address the problem of hard-working, driven poor people being less able to move up the economic ladder than (perhaps) would be ideal, I suggest that they stop grinding political axes and start looking at the hard data. The data all indicates that the leading indicator for economic immobility is single parenthood, and that children of single parents are more likely to also be single parents themselves later in life. Get to the root of the problem and you find that this is not something that government can forcefully correct – and frankly, I’d be terrified if they tried.

Matt Souders
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“Climate Change”, and the false dichotomy of “evil or stupid”

Activism, Corruption, Culture, Dumbasses and Authoritarians, Economics, Energy Policy, Environment, Foreign Affairs, Government Regulation, Hubris, Individual Rights, Politics, Property Rights, Theory and Ideas

As we run up to the midterm elections, the drumbeat is once again sounding throughout that land, that Republicans… or rather, everyone not Leftist… are “anti-science”, “pro-ignorance” etc… etc…

I am constantly hearing some variant of “Republicans are either evil or stupid for not… X”.

The sad part of course, is that a certain percentage of non-leftists, including libertarians and conservatives are in fact, nuts, particularly about science… and another large block are ignorant.

Of course, so are large blocks of those on the left… but that’s not what we’re talking about right now.

There are certainly many scientific issues over which the ideological spectrum split, but likely the biggest one, with the most uniform split (there’s very few whose ideological “side” don’t match the position staked out by that side, to some degree or another)….

“Climate Change”

Ok, talked about it here before, and there’s plenty of great resources on the topic (try Climate Skeptic for a start)… But it’s an issue among my friends right now, and Neil Degrasse Tyson has been talking about it lately (before his most recent brouhaha), facebook is… well, pretty much always covered with it etc…

Let me just lay things out for a bit…

First, YES, there ARE loonies out there who say that there is no climate change “because Jesus” or “It’s all a conspiracy man” etc… etc… etc…

Feel free to ignore them, as you would on every other subject. They don’t represent any kind of reality based universe, never mind a rational position.

There are also those who simply say that there is no such thing as climate change whatsoever… But mostly they are either ignorant of, or don’t understand, the science, math, or historical record in question

And yes, there are far more of those than there should be in 2014.

However, some of us come to our positions through a knowledge of science, engineering, math, the scientific method, research methodologies and data analysis.

There are those, myself among them, who actually DO understand science, and don’t believe in CATASTROPHIC, ANTHROPOGENIC, global warming, leading to systemic, catastrophic climate change.

We are not irrational, ignorant, evil, driven by unsavory motives, or stupid.

We come to this position, because we understand that:

  1. The question isn’t whether climate is changing and will change in the future, it always has and always will. The question is how much has it, how much will it in the future, and why.
  2. Catastrophic, anthropogenic, global warming leading to catastrophic climate change, is a tightly interconnected theory. For any element of the conclusions to be correct, ALL of the suppositions within the theory must be correct. The instant any of them changes, at all, the theory falls apart.
  3. The mathematical models for this have always been highly speculative and have proven non predictive both forward and backward.
  4. The data is greatly variable ( and often poor) in quality, and is adjusted in ways that make it less than useful for a model with high sensitivity predictions, because small changes or inconsistencies in the data make big changes in the model.
  5. The catastrophic model adopted by the U.N. has some major dependencies which are entirely theoretical, and have not been borne out by historical facts; specifically estimates of forcing, estimates of weighting of various factors, and particularly estimates of extremely high sensitivity to certain factors (especially CO2), that while throughout all of history have exhibited one behavior (a stable, negative feedback system), for some reason (i.e. humanity is bad and stuff), things have changed now… even though CO2 has been much higher in the past, and it didn’t happen then… Such that a very small change in CO2 will have a large multiplier effect, transforming the stable negative feedback system that the climate has been throughout the entirety of history to this point, to an unstable positive feedback system.
  6. There is no evidence for this catastrophic theory, nor does it correspond with historical models, or models that prove to be historically predictive (i.e. if you run the model backwards and forwards in time, it matches roughly with what actually happened).
  7. This prediction has been made since the mid 80s (prior to the mid 80, from the early 70s they were predicting global cooling and ice age by the way), and the models have proven to be grossly inaccurate. They are constantly revised to reflect the same conclusion, but never actually predict what ACTUALLY happens in the real world. There was initially slightly more warming than the previous historical models predicted, but by 1991 warming was back to the historical trend line, and there has actually been no significant warming since 1994-1998 depending on exactly which dataset you look at.
  8. Human outputs from all of industry, vehicles etc… Make up less than 1% of total atmospheric CO2… actually between .3 and .4%. The VAST majority of CO2 comes from forests, oceans, animals, and soil (and the bacteria contained therein). They also absorb CO2 in the natural CO2 cycle.
  9. If the historical, non catastrophic models prove correct, and they have so far, there will be between less than 1 and just over 2 degrees centigrade warming in the next 100 years. This is not catastrophic, and is consistent with warming/cooling cycles throughout history.
  10. If all human output of carbon dioxide and other theorized elements of climate change stopped right now, today… That number wouldn’t change at all, or at most very little. Within the margin of error.
  11. Once you take the catastrophic sensitivity to a tiny change out of the model, many other factors become far greater “forcings”, particularly the suns variability (relating to sunspot cycles).
  12. If the catastrophic models are correct, either we already have, or we soon will, pass the point of no return. We would not only have to completely stop emitting CO2 entirely, but we would have to take large amounts of it out of the environment.
  13. No matter what, the developing world isn’t going to stop burning wood, and coal, and growing and modernizing and using as much hydrocarbons as they can. They don’t give a damn what european liberals think, they just want to cook their dinners and have lights at night.
  14. No matter what, China and India aren’t going to stop being 60+% of all CO2 emissions from human sources (that’s according to the environmentalist group, the earth policy institute. UN numbers say it’s more like 30-40%), because if they did they’d all be plunged into even greater poverty and likely starve to death.

What it comes down to is this:

  • If the catastrophic models are correct, it’s too late to do anything about it anyway.
  • Even if every western nation utterly stopped producing ANY output which contributed to climate change, it wouldn’t make any difference whatsoever.
  • If the catastrophic theory is wrong, and everything point to it being so, then we would be spending trillions of dollars, destroying economies, ruining millions or billions of peoples lives etc… All for little or nothing.
  • There are real, actual, proven problems that are far more likely to be important, and that we can actually do something about, that are much better ways to spend our time and money.

    • Ok… so why do so many people support the idea… particularly so many scientists?

    The same reason anyone does anything… because it aligns with their perceived incentives, beliefs, worldview, narrative, and identity.

    To wit…

    1. Funding
    2. Social signaling an ingroup identification
    3. Politics
    4. Power and control (climate change legislation is all about taking power and control from one group, and giving it to another)
    5. Ideology and alignment with world view
    6. The precautionary principle
    7. Anti-capitalism
    8. Funding
    9. Because if they don’t, they don’t get jobs, their papers don’t get published, they don’t get university positions etc…
    10. Because they know that it’s not as bad as the press makes it out to be, but that making it super duper scary is the only way to make the morons out there pay attention and actually make some of the good positive changes that need to happen (like more energy efficient technology, and more research into alternative energy)
    11. Because the entire world has lined up into teams, not just about climate change, but about ALL social, cultural, and scientific issues… Evolution, homosexuality, everything else about the environment etc… and one team has decided to label themselves “progressive” and “liberal” and “pro science” and the other team “anti science”, and nobody wants to be “regressive” and “anti-science”.
    12. Did I mention funding? There is no funding in saying “things are going to be about like they always have been, with some small changes as expected, and maybe a very small degree of increased change… it will have some moderate impacts”. That’s boring, and it gets ignored, and no-one gets any funding, and you can’t do additional research on it. No-one is paying for research into squirrel populations and how “1 degree per century of climate change will impact them).

    Yes… I repeated myself, in several different ways there… That was intentional.

    The Broken Record

    Catastrophists have a record, of being broken records… and being mostly or entirely wrong.

    From 1974 until 1985 or thereabouts, many of the exact same scientists, politicians, pundits, and environmentalists who today are saying are going to warm our way into a combination of ice age, deserts, and typhoons everywhere… were saying the exact opposite.

    At the time, their theories and models said that we were going to precipitate our own ice age, blocking out the sun, and that crops would fail and we would starve to death.

    The fact is, we’ve heard over and over again for decades that if we don’t do exactly what this one particular group wants us to do about any particular issue within 5, 10, 20 years etc… that we’re all gonna die, the world is gonna end, everything will turn to dust, there will be no birds, no trees…

    Anyone remember when acid rain was going to kill us all?

    Yes, in part, it’s because we did respond to the concerns of the environmentalists, regulations were changed somewhat, technology got better, we polluted less and cleaned up more. These are all good things.

    But mostly it was because they were dramatically overstating both the problems, and the solutions; either because they actually believed it, or for political reasons…

    Seems to me, mostly for political reasons.

    Mostly we haven’t done what they asked.

    The world didn’t end.

    We didn’t all die.

    Of course, that doesn’t mean they aren’t right this time…

    …One of these times they just might be… or at least they might be more right than wrong…

    …it just means that we should really be very careful, and very skeptical, about what they say, what we believe, and what we do about it.

    Oh and one more thing…

    There is one final, and almost universal test of the validity of someones claim that “everything has to change”.

    It can’t prove that a claim is true… but it can nearly always prove a false claim to be false, or at least greatly exaggerated.

    Simplified, it’s called the “Act as If” test.

    Does the person making the claim, act as they would if the claim were true, and as urgent as they say?

    Is it conclusive? No… but it’s a pretty strong indicator.

    Do those who say they believe in truly catastrophic anthropogenic global warming pass this test?

    Do they actually act as they would, if they actually believed their predictions.

    The answer is very much no… not even close.

    So, if they don’t… why should anyone else?

    Chris Byrne
    I am a cynically romantic optimistic pessimist. I am neither liberal, nor conservative. I am a (somewhat disgruntled) muscular minarchist… something like a constructive anarchist.

    Basically what that means, is that I believe, all things being equal, responsible adults should be able to do whatever the hell they want to do, so long as nobody’s getting hurt, who isn’t paying extra

    http://anarchangel.blogspot.com

    Watch A Couple Of Millennials Talk About Barack Obama’s Policies Have Harmed Their Generation

    Credit Crisis, Economics, Education, Election '14, Election '16, Fiscal Policy, Healthcare, Hope n' Change, Strategies For Advancing Liberty, The Welfare State

    A couple of young Millennial women, Alyssa Lafage and Elly Mae, appeared on “The Rick Amato Show” on the One America News Network (don’t worry, you probably don’t even get the channel). Amato had both young ladies on to talk about how the policies of President Obama and progressives have harmed the Millennial generation.

    Some reports show that Millennial unemployment remains high at 15% in September. This summer, it was estimated that Millennials are 40% of the overall unemployed in this country. Millennials still cannot afford health insurance, despite Obamacare’s promises.  Finally, Millennials are trapped by high amounts of student loan debt, which cannot be discharged in bankruptcy, in order to obtain near worthless degrees.

    Watch these two Millennial women describe how the polices of President Obama and progressives have harmed their generation and made their generation worse off than ever. Also, check out our own Quincy’s takedown of Obama drone Paul Krugman’s proclamation of Obama as one of the greatest presidents ever which touches on some of these same issues.

    h/t: Wayne Dupree

    Kevin Boyd
    I’m one of the original co-founders of The Liberty Papers all the way back in 2005. Since then, I wound up doing this blogging thing professionally. Now I’m running the site now. You can find my other work at The Hayride.com and Rare. You can also find me over at the R Street Institute.
    https://thelibertypapers.org/2005/11/22/a-bit-about-kevin/
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    Cost is NOT Price, and Neither Cost, nor Price, are Value

    Currency and Monetary Policy, Economics, Energy Policy, Federal Reserve, Fiscal Policy, Government Incompetence, Government Waste, Inflation, Monetary Issues, Strategies For Advancing Liberty, Theory and Ideas

    Prices Provide a Misleading Measure of Dollar Devaluation
    Forbes Magazine Online – Keith Weiner

    There’s not a human being alive who doesn’t know the dollar is falling. Everyone over 25 has stories of what prices were like, way back when (and younger people have heard them). I remember when gasoline was 60 cents a gallon, and my mom remembers when it was 20 cents.

    Federal Reserve Chair Janet Yellen acknowledges the official objective to push the dollar down by 2 percent per year. This intention is behind the Fed’s ill-conceived loose money policy.

    It’s important to measure each drop. This is not just to keep a scorecard on the Fed, but because a change in the dollar skews historical comparisons and distorts business decisions, like giving increases to workers and pensioners….

    Read the whole piece, and then come back…

    The thesis statement of the piece is correct, in that prices provide a misleading indicator of currency valuation (and that our weak dollar policy, as pursued by every administration since Bush 1 to some degree or another, is fundamentally wrong and destructive for that matter).

    Unfortunately the author suggests that simply using a different price denomination and comparison (to gold) is a less misleading indicator… In this, he’s absolutely incorrect.

    What you really want to compare is purchasing power parity (PPP) as measured by equivalent standard of living, expressed as a dollar cost in constant dollars normalized to average labor hour wage or compensation.

    i.e. this item costs 5 minutes of average labor, this costs 8 hours, this costs 20 years; the cost to maintain this equivalent normalized standard of living across an aggregate population is 1940 hours of median labor wage etc… etc…

    Note, this is NOT an expression of the fallacious labor theory of value, it is an explicit measure of purchasing power parity as actual cost, INCLUDING opportunity cost (in terms of time), not currency denomination.

    The critical function isn’t price, and it isn’t wage… it’s cost, in this case expressed as a cost to value ratio as a normalized dollar (to make it easy to relate to wages and prices).

    Cost is not price; it’s a totalized measure of inputs including resources, time, and opportunity.

    Chris Byrne
    I am a cynically romantic optimistic pessimist. I am neither liberal, nor conservative. I am a (somewhat disgruntled) muscular minarchist… something like a constructive anarchist.

    Basically what that means, is that I believe, all things being equal, responsible adults should be able to do whatever the hell they want to do, so long as nobody’s getting hurt, who isn’t paying extra

    http://anarchangel.blogspot.com

    Windowpanes, Pencils, and Paperclips

    Economics, Free Trade, General, Government Incompetence, Liberty, Theory and Ideas

    A few days ago I wrote something on facebook that bears repeating here:

    A comprehensive understanding of the pencil problem, combined with a thorough understanding of the broken window fallacy (and its inputs and corollaries… Hazlitt for example), makes a pretty good inoculant against socioeconomic lies and stupidities.

    Although they are implied by the conditions above, perhaps one should also specifically reference the scale and complexity problems, the perfect information fallacy, the perfect man fallacy, and the law of unintended consequences…

    Some of our readers may be unfamiliar with the pencil problem.

    In comments, the novelist Ryk Spoor provided a decent explanation, which I’m going to paraphrase here, with my own edits and revisions (and the addition of the last bit, about planning and control):

    No one man, can make a pencil, or at least a pencil which could be sold economically.
    In general terms, the pencil problem, is that even simplest and most common objects in our civilization generally require an immense number of people and inputs; to not merely build, but manufacture and sell in sufficient numbers, to make it worthwhile to build them cheaply (or at least so that they can be sold economically).

    The applies to everything from cars and computers, to pencils, to paperclips.

    If you wanted ONE paperclip, it would be an epic undertaking, from locating the appropriate ores, refining them, turning them into steel, figuring out how to draw the steel into the appropriate size of wire, and then finally producing the paperclip from that wire. The amount of effort involved in it would be months of your labor, assuming you had the talent and resources to do it at all.

    Instead, you go to a store and buy a 100ct box of them for a dollar; or even at minimum wage, a few minutes of your time for a hundred of the things.

    Multiply that by all the different types of goods and services in a modern civilized society, and it starts to become clear just how many people, in how many different specialties, with how much infrastructure, are needed to keep everything running.

    Given that scale and complexity, it should also be clear how impossible it would be to plan, control, and manage, anything approaching a national economy or infrastructure centrally; or in fact in any way other than as devolved and decentralized as possible.

    The original statement of the problem in this way came from an essay by Milton Friedman (which was a restatement of an earlier essay, “I, Pencil” from Leonard Read, which was a restatement of Hazlitt, which was a restatement of Bastiat and back down the chain).

    A video of Friedman explaining the problem:

    Chris Byrne
    I am a cynically romantic optimistic pessimist. I am neither liberal, nor conservative. I am a (somewhat disgruntled) muscular minarchist… something like a constructive anarchist.

    Basically what that means, is that I believe, all things being equal, responsible adults should be able to do whatever the hell they want to do, so long as nobody’s getting hurt, who isn’t paying extra

    http://anarchangel.blogspot.com
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