Wealth Inequality in America: A Partial Critique

So I’m a little late on this one, but there is a viral video on wealth inequality in the United States going around that compares what a survey of 5000 Americans said they thought wealth inequality should be and then compared that to what it actually is. Well, as many of you know, wealth inequality is substantially larger than most Americans think it is:

Now I should start off by saying I agree with this video in part. Wealth inequality in the United States is too high and it’s getting worse. While proponents of free markets rarely complain about income inequality directly like say Joseph Stiglitz, they do complain a lot about corporate welfare. Tim Carney’s book, The Big Ripoff, is to me the best rundown on the whole bloated mess. And what would corporate welfare probably lead to… well, more income inequality.

That being said, there are problems that should be highlighted. Some of these problems relate to what is considered wealth but the big one is actually a sort of meta-problem with the way that normal people think about inequality. In other words, what people think inequality should be doesn’t make any sense if they actually think about. Why you ask? Well, let me explain:

1. The Big Missing Variable

The big missing variable when discussing income inequality is increased exponentially in terms of it’s importance when discussing wealth inequality. Indeed, it may be startling to think of how simple a variable this is.

Age.

It seems obvious now that you think about it, doesn’t it.

After all, how much money were you making when you were 25 compared to 45. Probably less than half. But when it comes to wealth, oh lord, it’s not even close. The wealth inequality figures discussed in the video make no attempt to control for age. And as a matter of fact, the gap in wealth between the young and the old has been growing.

According to a Pew study, the net wealth of those over 65 between 1989 and 2009 went from $120,000 to $170,000, a 42% increase. For those younger than 35, their wealth actually decreased from $11,500 to $3500, a 68% decrease. And more importantly, $170,000 is 4850% of $3500!

Now remember that these aren’t the same people being measured over time. Perhaps this has something do with people going to college more and thereby 1) starting their career later and 2) having a lot of student debt to pay off. Thereby they’re worth less when they’re young, but more when they’re old. Or perhaps kids these days just don’t know how to save like they’re folks did.

But when you boil it down, people under the age of 44 only possess 11% of the wealth in the United States. That’s an incredible figure if you think about it. And remember, these people are going to get older. They’re going to pay off their student debts, get that big promotion, pay off their house, inherit their parents wealth, etc.

For example, take this thought experiment; say everyone in the country made the same income, but each decade of life they got a promotion. They start at $20,000/year in their 20’s, then they go to $30,000/year in their 30’s, etc. In addition, they save 5% of their income each year and make no return on their savings. Assuming there are as many people in their 70’s as 20’s (which of course there aren’t, but bear with me), this is what the income and wealth inequality would look like:

Or as the video presents it:

And that’s assuming that everyone is equally talented, that every industry is equally as profitable and that everyone has just as good of saving and investment habits. Furthermore, if I put in just a small return, that chart would be skewed even more. At 3% interest, if the person contributes every month, on their 30th birthday they will be worth $11,627. On their 60th, they will be worth $198,486. In that case the bottom 20% is worth only 2.69% and the top is worth 45.6% of the total. And that acts as if everyone in their 20’s is worth over $10,000 when in reality most are worth next to nothing.

Any serious look at wealth inequality, and income inequality for that matter, has to take age into account.

2. Entitlements

OK, our entitlement systems are a little underwater, but ignore that for a second. Payroll taxes are capped at $113,000, so in some ways it acts as a regressive tax. But then again, it’s not supposed to be a tax, it’s a government mandated insurance scheme.

Well, throwing in Medicare and Social Security add a little for the rich, but they do add a substantial amount of wealth to the poor in relative terms. How much more wealth would the poor and middle class have if instead of paying into a government program they were mandated to put that money in a health savings account or IRA or something to that effect? Well, it would be quite a bit. This would smooth out the curve a bit. While it makes sense that the author of the study don’t include entitlements since it’s based on when you need it (Medicare) or how long you live (Social Security), conceptually, we need to take them into account.

So let’s take a shot at it. According to Bankrate.com:

… A male average earner who retired at age 65 in 2010 paid out $345,000 in total Social Security and Medicare taxes, but will receive $417,000 in total lifetime benefits ($464,000 for a woman)… In the case of a household with only one wage earner, the taxes paid out were $345,000, but the benefits received by both parties will be $778,000. For two-earner couples where one earned the average wage and the other earned a low wage ($19,400), tax payout was $500,000, but benefits will be $800,000.

OK, that doesn’t sound particularly sustainable, but if that average person is taking out some $400,000 plus in benefits, couldn’t that be thought of as a form of wealth?

3. Individuals vs. Families

In the video, the narrator describes the survey as separating the American population into “groups.” Groups of what? Well he doesn’t say. Luckily the links in the lowbar did. And you guessed it, it’s family wealth, not individual. Once again I have to clarify this ridiculous error. When family sizes vary in shape and size you simply cannot compare them as if they were the same. As Thomas Sowell has noted:

 Households are of different sizes, they vary over time, they vary from one group to another, they vary from one income level to another. So for example, there are 39 million people in the bottom 20% of households, and 64 million in the top 20%. So you’re saying, yes, 24 million additional people do tend to have more money.

Or in other words, the top 20% has almost 60% more people in it than the bottom. Even if there were an equal number of people in the other three “groups” and every individual had the same wealth, the top 20% would have almost 25% of the wealth and the bottom 20% would have barely 15%. When we further take into account that many in the bottom 20% are in prison, single parents, people on welfare, disabled, drug addicts, homeless, etc. it becomes clear that dividing the country into such groups is simplistic at best.

In Other Words…

Now again, even after all that, I do think this is a problem. And I will join liberals in denouncing the major role corporate welfare played in all of this (and I would add, Federal Reserve policy). However, before liberals get too far into their rant about about taxes being too low and regulation being too light, I should note some other possible reasons.

1. Immigration: I believe the impact is relatively small on income inequality (David Card, for example estimates it’s share is only 5% of the increase between 1980 and 2000), I do think it’s effect on wealth inequality is large. Most immigrants, after all, come to the United States relatively poor.

2. Dependency and Welfare: Charles Murray’s new book, Coming Apart, makes the case that the values of the upper class and lower class have diverged, and I do think there’s something to this. Indeed, while in 1960 only 9% of men in the bottom 30% between the ages of 20 and 64 were working. In 2000 it was 30%! In 1996, only 0.286 people in single person households in the lower median worked. It’s hard to increase one’s income, and very hard to increase one’s wealth when you aren’t working. How much has this separation in values played a part? And oh by the way, the decline in marriage probably hasn’t helped either.

3. Technology: I think this is the big one. Charles Murray touches on it a lot as have many others from all across the political spectrum. To use Murray’s example, in the 60’s, someone who was really good at math could become a math teach and make a decent living. Today they could go work for a Quant Fund on Wall Street or maybe for Google and pull seven figures a year. Or take music. Back in the day, musicians wasn’t such a feast or famine gig, because there were no recording devices. So the gigs were how you made a living. Today there’s a bunch of starving artists and a few megastars. And then of course there’s automation and robots and computer algorithms that are making lower end manual labor jobs less necessary, and they’re starting to do a number on service jobs as well.

In other words, the problem is complicated. I do think globalization plays a role (although I think it plays a role in lowering poverty levels around the world too). And of course it should be mentioned too that people have different levels of talent and produce different levels. Those who produce the most should be rewarded. And without some inequality, there’s no incentive, at least no material incentive, to work hard and bring great products and services to the market.

It’s just that inequality is too high. And while that’s still a subjective opinion, I think it rings true for most of us. Just be careful to wade through these statistics before yelling that the sky is falling.

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Swift Reviews: Coming Apart

Coming Apart is the latest book from the highly controversial author, Charles Murray. It is definitely food for thought as well as quite alarming. Murray shows how the upper class and lower class of the United States have diverged in just about everything. He focuses only on white people until the very end to emphasize it’s not a racial problem (in fact, adding race back in hardly makes a difference). While the top and bottom of American society have always been quite different, the trends are pushing them apart into something unprecedented.

The theme, boiled down, is that the “founding virtues” or what Murray believes are the important building blocks of civic society—namely marriage, industriousness, honesty and religiosity—have declined dramatically among the lower class, but have thrived among the upper class. In addition, what’s called social capital (the networks and organizations throughout society), while dissipating throughout society, has plunged in the bottom third. This is not a new discovery, Robert Putnam discussed it at length in Bowling Alone. However Murray has expanded on that by showing the drastic contrast between the classes. He also notes how this trend is compounded by primarily technological forces that have made intelligence much more important. 50 years ago, someone who was really good at math and what not would become a math teacher and get by on a decent salary. Today, they go work for a hedge fund, Google or one of those mysterious quant funds and pull in seven to eight figures a year!

Early on, Murray actually hurts his argument by conceding that “real family income for families in the middle was flat” (pg. 50). In fact, the term “family income” or household income” is highly misleading. As Thomas Sowell has pointed out:

It is an undisputed fact that the average real income… of American households rose by only 6 percent from 1969 to 1996… But it is an equally undisputed fact that the average real income per person in the United States rose by 51% over that very same period. How can both these statistics be true? Because the average number of people per household was declining during those years. (Economic Facts and Fallacies, Pg. 125)

So the only reason the lower and middle classes have a “flat” income is because there are less people in each household working. And yet, the “founding virtues” have still deteriorated.

In one of the most bizarre mysteries of our day, he notes what David Brooks has termed the “bourgeois bohemians.” Namely, very liberal people who live very conservative lifestyles. These are typically the elite of society; those that live in the super zips (zip codes in the 99th percentile of wealth). They get married, stay married, work for a corporation usually, have kids, don’t do drugs, rarely drink and more often than you would think, go to church.

If you go outside of San Francisco, Los Angeles, New York and Washington D.C., those who comprise the super zips are about evenly split between conservatives and liberals. And funny enough, while they’re politics are polar opposites, they’re behavior is basically the same. The elite, or top 20% of society, Murray refers to as Belmont. And whether it’s the tree-hugging or gun-toting sort of Belmont, the people generally adhere to the four “founding virtues.”

At the bottom, things are much different. Charles Murray splits the bottom off at the bottom 30% of white Americans, which he calls Fishtown. Let’s take an example from industriousness:

In the 1960 census, about 9 percent of all Fishtown men ages 20-64 were not in the labor force. In the 2000 census, about 30 percent of Fishtown men in the same age range were not in the labor force. (pg. 216)

Indeed, the number of people on disability insurance has increased by a somewhat significant 900% since 1960! And it should be noted that life and work are getting safer, not more dangerous.

With regards to marriage, it is well established that two parent families do the best in the aggregate. Well, in a truly haunting chart on page 167, Murray shows the percentage of children living with both biological parents in Fishtown when the mother is 40 fell from 95% to 35% in from 1960 to 2005. In Belmont, it stayed put at about 90%.

Murray primarily focuses on the crime rate when discussing honesty. The crime rate is down recently, but is still up a lot (at least in Fishtown) since 1960. I think he again shoots himself in the foot here as I’ve heard of several studies showing a decline in honesty. Here’s one from Britain and I believe the same trend is mirrored in the United States. Still, the crime rate is bad enough, especially given how high the American prison population is.

All this shows a decline in social capital, or the connections between individuals through various civic organizations. This is why Murray finds the decline in religiosity troubling. Although this mostly has to do with the secular (not atheist) poor. It may be the lack of belief in a reason to existence provides no incentive to act or a no moral code to follow. Or it may simply be a lack of social and charitable organizations to take the church’s place. 

Murray does give his prescription, which is similar to mine; the government has usurped the civic institutions at the local level and created dependency through its welfare programs. It needs to get out of the way for civic society to reemerge. I should note, this is basically the thesis of Robert  Nisbet’s great book The Quest for Community. The bigger the government, the smaller the individual… and civic institutions for that matter. It is not the supporters of the free market who are atomistic or whatever. It is the supporters of big government who are.

Murray also chastises the upper class for both their non-judgementalism (which, in my judgement, is just a way to say you’re too lazy or scarred to have an opinion) and their unseemliness. I heard of a guy building a house with 5 bedrooms, 8 bathrooms, 3 kitchens, 2 glass elevators and an indoor swimming pool with a retractable roof. No one needs that. It seems that the upper classes have simultaneously lost their judgmentalism and their shame, and it all just drives the classes further apart. Classes that have been fairly fluid in years past, but are becoming more solidified.

Murray’s central argument is that this class-solidification is not economic, as liberals tend to say, but a separation of values and behaviors. I think there’s some truth to both (corporate favoritism and Federal Reserve policies have driven some of the class divide, and part of it is overstated in my opinion), but from the work of Murray and others, as well as working in and near lower end areas and witnessing much of this self-destructive behavior first hand, I have to agree more with Murray.

But as he cautions, this book is not primarily about solutions. Instead it’s the first step, and that is to simply admit we have a problem.

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Photo Credit: cxlxmxrx.blogspot.com/ and besttoysforbaby.com

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Media Matters Criticizes Me (sort of) and Unknowingly Makes a Major Concession in the Process

So Media Matters, a truly unbiased organization if there ever was one, ran an article criticizing conservatives for denying the alleged wage gap between men and women. The article particularly criticized Alex Castellanos, who got into a bit of tiff with Rachel Maddow about said wage gap.

Well it just so happens that Alex Castellanos used my article on the wage gap as a major source for his conclusions. (Yep, I got cited by name in The Daily Caller, what what).  I’ll get to the article by Media Matters in a second, but first I need to respond to the commenter, one MidnightWriter, who noticed where Castellanos got much of his information:

It wasn’t all that difficult to eviscerate.

Castallenos admitted to getting his facts from this blog which, in turn, borrowed heavily from John Stossel, James Bennett, and Thomas Sowell.

Oh boy, I’m about to be eviscerated! It is true, however, that my entry was mostly a summation of research by James Bennett, Thomas Sowell, Warren Farrell and Denise Venable.

This was the strongest source ol’ Alex could find to back his arguments? We’re asked to accept some rather broad ground rules centered on what can be called same pay for the same work (such as the idea that history professors are not paid as well as business professors — something offered with no numbers to support that thought, nor are we given any numbers that tell us the averages of what male and female professors in those fields are paid). We’re offered two rather misleading charts; one that shows that more men receive college degrees incomputer science (which has nothing to do with equal pay for equal work), and a chart that offers weekly median earnings (the issue is averages).

Average full time business professor: $111,621, average full time history professor: $82,202. The average associate and assistant business professor make $93,767 and $87,248 respectively. The average associate and assistant history professor make $63,228 and $52,626 respectively. (Source: here). Of full time, associate and assistant professors in business, women make up 17.9%, 29.1% and 37.3% respectively. In history, women comprise about 18%, 36% and 44% respectively.  Google searches no están difícil. Furthermore, this was one small point that was supposed to be so obvious it didn’t require a citation (the sky is blue by the way) to illustrate why inequality doesn’t necessarily equal discrimination.

Both graphs were supplemental and not even referenced in the text. A degree in computer science is well known to come with a higher wage than say, sociology. (Are you really going to ask for another citation here?) And medians are actually better than averages typically because they eliminate outliers that would otherwise skew the data. I explained this in a later entry of the Lies, Damned Lies series and you can enjoy this guy’s take on it.

And, of course, there was that classic bit of cherry picking, college educated, never married women between the ages of 40 – 64 actually earn more than college educated, never married men between the ages of 40 – 64. Seriously? That ever so slender slice of the pie is supposed to prove just what now? Here we have one select demographic group where the women earn, roughly 20% more than the men — well, geez Louise, how much worse does that make it in all the other categories for women to end up earning 23% less overall?

The argument is so exceptionally and epicly bad it will require a list of bullet points:

> MidNightWriter forgets to mention that I listed four statistics, not just that one, illustrating the wage gap was fallacious

> What exactly is MidNightWriter’s explanation for the gap I mentioned? Do employers discriminate in favor of never married women without children over the age of 40 but just lay the hammer down to all other women? Why would they do this? Oh wait, one of the other statistics MidNightWriter forgot to mention that I included stated unmarried women ages 21-35 make the same as unmarried men of that age. Those poor 18-20 and 36-39 year old women!

> Never once does MidNightWriter mention the crux of my argument and the whole reason to segment off never married women without children: The marriage asymmetry hypothesis. This is like criticizing Darwinism without mentioning his theory of evolution.

> Nor does MidNightWriter mention all of the variables I discuss that contribute to gap. Nope, the only thing that matters is the raw comparison, a comparison which is, quite obviously, meaningless.

And finally:

I’ve got to say, though, I did love the title — “Lies, Damned Lies, and Statistics.” The author knows his Mark Twain, but apparently has no concept of irony.

Maybe MidnightWriter was discussing the fact that Mark Twain popularized the term, but I doubt it. Sorry MidnightWriter, Twain didn’t come up with it, he attributed the saying to  Benjamin Disraeli (although there is some controversy as to whether Disraeli came up with it either).

Anyways, enough with MidNightWriter, what about the Media Matters article. Well the article lists out a bunch of conservatives, including Castellanos, who have criticized the wage gap. Then it blows them out of the water with an AAUW report:

Overall, the regression analysis of earnings one year after graduation suggests that a 5 percent pay gap between women and men remains after accounting for all variables known to affect earnings. Women who choose male-dominated occupations appear to earn more than do other women. Undergraduate majors in business and management, engineering, health professions, or public affairs and social services enhance both women’s and men’s earnings. [AAUW, April, 2007]

Wait, what? … 5%?* That’s it? What happened to 77 cents on the dollar? Hold on, they’ve got more:

 Bush Labor Department: The “Adjusted Gender Wage Gap … Is Between 4.8 And 7.1 Percent.” In January 2009, the Bush administration’s Department of Labor published a report written for the department by CONSAD Research Corporation. While downplaying the existence of wage inequality, Deputy Assistant Secretary of Labor Charles E. James stated in a foreword to the CONSAD report that after controlling for several variables, there was “an adjusted gender wage gap that is between 4.8 and 7.1 percent.” [CONSAD Research Corp, 1/12/09]

Fascinating. This is the same report I mention in the expanded version of this article I put into my new book. I’ve never said that some sort of wage gap is impossible, just that it’s very much exaggerated if it does exist at all. Indeed, I think the CONSAD report misses some things, which I will get to shortly.  But either way,  I haven’t seen any “92.9 – 95.2 cent” pens in protest of the patriarchy. Nor have I heard Media Matters or any other liberal apologize for distorting the wage gap by some 300%!

And OK, I’m a man so I guess I’m not supposed to have an opinion on these things, but ladies, at what point does the wage gap become trivial? 1%? 3%? 5%? If guys still pay for dates most the time and the wedding rings we buy are a wee bit more expensive, maybe we have a date/wedding ring premium. Or maybe it’s this (warning, much profanity ensues):

Regardless, even saying it’s 5% or thereabout is questionable. The idea that you can control for every variable is a fallacy. Russ Roberts has a great discussion with Jim Manzi on this very subject I highly recommend. As Jim Manzi explains:

I’ve built thousands of regression models in my life, and they are not useless; they are useful for certain purposes. What I argue is that they are not capable of determining reliable, useful, and nonobvious effects of interventions…

…if I have a regression analysis that tries to predict a set of variables–say, I want to predict what unemployment will be as a size of the size of the employment, hypothetically, the size of the population, economic growth rate in a prior period, the education level of the population, and so on, and I say: I am trying to use this to measure the effect of changing education levels on unemployment. And all the variables other than education level are meant to be controls, or to hold constant these other effects we described. That if I neglected to include a variable in my model for, let’s say, the amount of immigration into the society, that turns out to be causally important, that what happens is by failing to include that, I modify or create instability in all the parameter estimates, including the estimate of the variable I care about. And therefore, if I’ve left out any significant variables from my equation, the estimate of the impact of the variable I care about is called into question.

And my argument is that all regression models, including… one that I built and take it apart in detail to show how this is true [referencing his book], all models like this are subject to omitted variable bias because we can’t get data on all the potential causes. The complexity of this phenomena overweighs our ability to build terms, to build interaction terms, and so on; and they are always subject to this problem of significant omitted variable bias. Such that we cannot rely on their results.

Yes, we can get close, but be very careful with phrases like “studies prove” or “a regression analysis showed.” There’s always some uncontrolled variable. Indeed, the CONSAD report doesn’t appear to take years at the same job into account (men 5 years, women 4.4 years) or total time spent out of the labor force. What about people paid on comissions? The CONSAD report, for its part, does mention:

If the salesperson’s wages includes commission on sales, discrimination by customers could result in a substantial gap in wages between male and female salespersons and service workers. (Pg. 55)

Amueod-Dorantes and the Mach find that piece rates and commissions are more prominent in increasing the wages of men relative to women…” (P. 93)

The word “commission” or “commissions” doesn’t appear in the AAUW report. Also, it’s not necessarily customer discrimination, for example, the CONSAD report also mentioned men paid with tips, i.e. waiters and waitresses, earned 11% less (Pg. 93). That could be an aberration, or discrimination on the customers part or something else entirely. Customers could discriminate slightly against male waiters and female cars salespeople or something along those lines that’s much more nuanced than Media Matters would have you believe.

With regards to the overall wage gap, it could just be that men dedicate themselves slightly more to their careers and women seek a better work/life balance. In other words, motivation is very important and not easily quantified and basically impossible to control for.  For example, a poll by MBACareers.comrevealed that men and women who obtain MBA’s have very different career aspirations:

Additionally, the survey revealed the long-term career goals for male and female MBAs differ as well. Men acquiring an MBA aspire to become president or CEO of both public and private companies or to start their own businesses. Women MBAs, however, ranked management consulting, executive level vice-president positions and non-profit executive management high among their career goals.

Indeed, I would go so far as to say women are wiser in this respect. But it’s a wise trade off that hurts the bottom line. And while young women have become a lot more career oriented, much of the data on the wage gap is from older men and women who, for better or worse, have and have had a more traditional mindset.

Finally, what about negotiating for raises? The evidence is a bit anecdotal but women appear less likely to do so. There are certainly things we could do to rectify this, but they have to do more with education and societal norms. Having the government negotiate or help negotiate on women’s behalf seems like the most patronizing thing imaginable.

Discrimination exists, without question, but it is not nearly as prevalent as Media Matters, Rachel Maddow or MidNightWriter would have you believe. And if the wage gap even does exist, it’s not anywhere near as big as they would have you believe either.

Photo Credit: PatDollard.com

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*While not mentioned by Media Matters, I should note that the AAUW report does say the gap widens to 12% later in life. If you average that out, it makes for about a 8-9% gap which is just above the high end of the CONSAD report.

 

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Thomas Sowell and Walter Williams on the Minimum Wage

Two legends discuss the problems behind the minimum wage, another good intention (well maybe) with unintended consequences (well, maybe again). Another great video from LibertyPen’s YouTube channel:

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Differences ≠ Discrimination (necessarily)

It's Not This Simple Folks

Say you’re walking home on the wrong side of the tracks late at night and you see a young, black man walking toward you. Do you become nervous? If so, does that make you a racist?

What if it is a black woman walking toward you? If you’re less scared than under the previous scenario, does that make you a sexist?

What if it is an old black man? Again, if you’re less scared, does that make you an ageist?

What if it is a young black man, but he is well kempt, wearing a suit and holding a briefcase while speaking with Oxfordian-like grammar on an iPhone 4? If you’re less nervous, does this make you classist (someone who discriminates on class, I don’t know what the term is)?

As Thomas Sowell has pointed out many times, progressives believe that groups being equal in the aggregate is what is “normal” when that is seen no where at no time in the history of the world. And often these differences are massive. And furthermore, often the minority is doing better than the majority. For example, Asians in the United States make more than whites (why doesn’t Jesse Jackson throw any protests about this?). Furthermore, the Tamil minority in Sri Lanka does better than the Sinhalese majority, the Chinese in Malaysia do better than native Malays, the Germans do better in most South American countries than the local populations as do the Lebanese in West Africa (Thomas Sowell discusses all this here).

In the United States, atheists are generally not trusted (to say the least). They also make more money than Christians. Hell, taller people make more money than shorter people. Can you simply infer discrimination from this?

What about men and women? Currently, men make up 97.6% of the Fortune 500 CEO’s (488 out of 500). This is sometimes cited as evidence in and of itself for discrimination against women. OK fine, but on the other side, 91.5% of the prison population is male. Is that not also discrimination? Shouldn’t both be 50/50? Instead, the majority of politicians, Nobel prize winners, top academics, business leaders, inventors and scientists have been and are men. But then again, most criminals, psychopaths, drug addicts, high school dropouts and the homeless (not to mention warmongering or oppressive politicians) are also men. Indeed, variance is probably one of the biggest differences between men and women, that is if one is to accept that we’re not all blank slates and evolution actually does exist.

Let’s make this real obvious; the following chart shows average income based on age for men in 2005. As you can see, when people get older, until about 50 at least, they start making more money. Is anyone stupid enough to believe that this gap is simply because employers discriminate against younger people? (I should note that as of 2000, the median age of blacks in the United States was 30 and the median age of whites was 39, which might be just a little bit relevant here.)

Now, many of the differences we see are likely environmental and much has to do with cultural or economic factors. The high rate of crime among black males, in my judgement, is mostly due to their poor economic status coming out of slavery and Jim Crow, the black markets caused by the War on Drugs, the disintegration of the black family incentivized by the welfare state, the miserable state of our monoplozied, public schools and a gangster culture that has unfortunately developed among some parts of the black underclass.

This is all conjecture, educated conjecture, but conjecture nonetheless. Surely though, environment and other factors play major roles. But even if genes were completely irrelevant, other things can explain differences in one’s environment than discrimination or even a general state of being “disadvantaged.” Walter Williams pointed out many years ago that African Americans with advanced degrees were more likely to become professors than go into other fields such as engineering. Well, so what? Maybe that’s what these individuals found the most rewarding. It’s not like professors are paid badly just because they make less than engineers. But they are going to make less on the aggregate than groups, such as Asians, who are more likely to enter these higher paying fields.

Discrimination certainly could be why, or part of the reason why, there are more blacks in prison than whites as well as more men in prison than women. It certainly could play a part in every difference I’ve stated and the countless numbers I’ve left absent from this piece. However, it’s important to remember, especially with all the racial tension circling around the media circus of the Trayvon Martin-George Zimmerman case, that differences, in and of themselves, do not necessarily mean discrimination.

Photos from http://backyardskeptics.com/, chegg.com and http://creoleindc.typepad.com 

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Thomas Sowell on the Wage Gap

So I’ve been getting some flak in the comments for my articles arguing women don’t make less than men for the same work and own much more than 1% of the world’s wealth (nothing on the one saying the female/male college gap is overstated though, hmmm). Anyways, I thought I’d call in some intellectual backup. Here’s Thomas Sowell explaining why the male/female wage gap is utter nonsense:

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Affordable Housing: Making Housing Unaffordable for Decades

Thomas Sowell explains:

 

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Tough Teachers

With mid-term elections in full swing, a plethora of campaigns are preaching education reform. Being a teacher may be as tough as its ever been considering school funding issues, increased class sizes, constraints with disciplining children, and generally teachers being asked to do more with less. But as any good teacher knows, it’s maybe as tough as ever for a student to get a quality education. Schools are sometimes asked to clothe, feed, and care for students in a broken home, or no home at all. Needless to say, if a child hasn’t eaten, bathed, dressed, or slept, they’re not going to be ready to learn.

However, there was a time when teachers held each student accountable, regardless of their personal situations. While there are always exceptions of students with legitimate challenges and extraordinary needs, children are often coddled in today’s public education system. Teachers have to watch their own backs in the classroom. They make sure, either by choice or necessity, that students always feel good. Thomas Sowell explores in his essay:

You could be any color of the rainbow and [Ms. Simon] would still give you hell if you didn’t shape up. She didn’t care if your home was broken or bent. Not once did she ask compassionately whether I had a nickel to ride the trolley to school or had to walk the whole 15 blocks. What she let me know was that I had better be there on time and with my homework done.

I think this is what is referred to as “tough love”. It may seem cruel to sternly discipline a student, but not as cruel as sending them unprepared and entitled into the world.

Our human capital is on the line, and in public education, we can’t even pay teachers based on performance.

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Nullification and Civil Disobedience

Nullification has long been thought of as a dead issue, but it has made a bit of comeback of late. The issue is whether states can nullify, or not enforce, federal laws they find to be unconstitutional. The constitutionality and morality of nullification seem like an important debate, but nullification is seen as ‘secession light’ and has become so tied up with the United States’ long history of racial oppression that the mere mention of nullification is likely to elicit charges of racism or sedition.

Indeed, when one thinks of nullification, a few things may come to mind: the nullification crisis of 1832, John Calhoun and slavery, Brown v. Board of Education as well as the struggle for civil rights in the 1960’s. While the nullification crisis of 1832 was a dispute over the “tariff of abomination,” the threat of nullification was also seen a preemptive measure in case the federal government ever tried to interfere with slavery. John Calhoun, who saw slavery as “instead of an evil, a good, a positive good,” was a major supporter of nullification and was instrumental in laying the intellectual groundwork for the secession that lead to the Civil War. There was talk of nullification for the Civil Rights Act of 1964. And actual attempts were made after the Supreme Court ruled on Brown v. Board of Education, which persuaded President Eisenhower to call in federal troops to escort the “Little Rock 9” to class in what was formerly an all-white school.  Nullification, as with interposition and secession, has without question been used to deny civil rights to minorities in this country.

It’s thereby not surprising that Princeton professor Sean Wilentz refers to the doctrine of nullification as “the essence of anarchy” and “neo-Confederate dogma” while Chris Mathews described it as the “terms of Jim Crow.” A whole host of other bloggers and political commentators have referred to it as a “code word for racism.” Among most on the left, nullification, and states’ rights in general, are simply an affront to civil rights.

However, I find this to be a gross simplification of a general concept. As with people who think secession is an evil idea forever intertwined with slavery, while simultaneously having fully supported the rights of Eastern European countries to secede from the Soviet Union, examples are being used to define a theory. Furthermore, it is quite interesting that the same people who oppose nullification typically support civil disobedience, such as that practiced by Mohandas Ghandi and Martin Luther King.

The reason I find this interesting is that nullification and civil disobedience have similar intellectual foundation. After all, what is nullification other than an act of disobedience against what the state legislature finds to be an unjust law? And what is civil disobedience other than an act of disobedience by an individual against what he finds to be an unjust law? The hierarchy of government in the United States goes down from the federal level, to the state, then local governments and finally to individuals and non-governmental institutions. Any act of disobedience along the way should be seen as an act of political defiance.

Yet when we look at Martin Luther King Jr., it’s quite obvious he opposed nullification. In his famous I Have a Dream speech, he decried Alabama “…with its vicious racists, with its governor having his lips dripping with the words of ‘interposition’ and ‘nullification.’” But Martin Luther King Jr. supported the Henry David Thoreau/Mohamed Ghandi ideal of non-violent civil disobedience. He referred to the difference between civil disobedience and crime as “the willingness to accept the penalty for breaking the unjust law is what makes civil disobedience a moral act and not merely an act of lawbreaking.” Those penalties can be high as the Selma to Montgomery marchers found out when they crossed the Edmund Pettus Bridge.

Surely attempting to nullify a law can certainly have consequences for states as well. This is especially true given how much money the federal government takes and then divvies out the states and could presumably withhold. Such actions can even lead to invasion, such as when the Soviet Union invaded Czechoslovakia (at that time, a state of the USSR) to halt liberalization efforts. While Martin Luther King Jr. was undoubtedly fighting a noble campaign to end the evils of Jim Crow, he missed the point here. Alabama’s governor’s goals were bad, but not necessarily the methods he used to push for those goals. After all, civil disobedience could be used by NAMBLA to defend pedophilia. That doesn’t change the ideal of civil disobedience, what Henry David Thoreau called “the true foundation of liberty.” And it’s simply undeniable that the basic premise behind nullification and civil disobedience are one and the same.

Consider the following hypothetical situation. Let’s say it was the federal government that had mandated segregation and not the states. Do you believe for one second that Martin Luther King Jr. would have opposed states nullifying that particular federal law? Martin Luther King Jr. was trying to crush segregation and I find it patently absurd that he would neglect a non-violent method of doing so if the situation had been as described. I would submit that it was racism that Martin Luther King Jr. opposed much more than any legal justification those racists put forth to maintain segregation. And for anyone who thinks such a scenario is unbelievable—because the federal government can be trusted on racial issues—allow me to enlighten you.

First of all, it’s important to note that it was not the slavery-defending John Calhoun who came up with the concept of nullification, but rather Thomas Jefferson and James Madison (two men who both opposed the institution). The two wrote the Kentucky Resolutions of 1798, which stated “that whensoever the general government assumes undelegated powers, its acts are unauthoritative, void, and of no force.” They wrote this in response to the freedom-hating Alien and Sedition Acts which made “writing, printing, uttering or publishing any false, scandalous and malicious writing or writings against the government of the United States” a crime punishable by up to five years in prison. This, of course, gutted the First Amendment of our Constitution.

As Thomas Woods, author of the new book Nullification, points out the north used nullification more often than the south in the antebellum period. One of their prime targets was the federal government’s fugitive slave clause, which required escaped slaves to be returned to the slave-owner they escaped from. Unfortunately, this was constitutional; however, it was enforced in a draconian way that trampled over state governments, especially after the Fugitive Slave Act of 1850. Wisconsin went the furthest, basically nullifying the entire act. (One handbill referred to it as “the Kidnapping Act of 1850.”) And just about every northern state nullified the act to one degree or another as evidenced by Texas’ Declaration of Succession in 1861, which said:

The States of Maine, Vermont, New Hampshire, Connecticut, Rhode Island, Massachusetts, New York, Pennsylvania, Ohio, Wisconsin, Michigan and Iowa, by solemn legislative enactments, have deliberately, directly or indirectly violated the 3rd clause of the 2nd section of the 4th article [the fugitive slave clause] of the federal constitution.

South Carolina protested about “…an increasing hostility on the part of the non-slaveholding States to the institution of slavery, has led to a disregard of their obligations [the Fugitive Slave Act].” Mississippi complained that “[The Union] has nullified the Fugitive Slave Law in almost every free State in the Union, and has utterly broken the compact which our fathers pledged their faith to maintain.” The union they refer to is the union of northern states, not the federal government, since the federal government was in charge of administering the Fugitive Slave Act. Indeed, abolitionist William Lloyd Garrison even recommended the north secede from the south so that the Fugitive Slave Act would be completely eliminated and slaves could escape to the north instead of having to make it all the way to Canada.

And the Fugitive Slave Act is just the beginning. Centralized states simply don’t have a good track record regarding racism. Some countries have enacted what could best be described as affirmative action for the majority. As Thomas Sowell points out in his book, Affirmative Action Around the World, in Malaysia, the majority Malays instituted preferential policies for themselves over the minority Chinese. The same was done in Sri Lanka in favor of the majority Sinhalese against the minority Tamils (and was one reason the country descended into civil war). Ira Katznelson even argues that this is what happened in the United States under the New Deal in his book, When Affirmative Action Was White.

And of course the trans-Atlantic slave trade was institutionalized by centralized European nation-states (as well as many other nation-states all over the world), which then brutalized many of the native populations. The U.S. government upheld Plessy v. Ferguson, which allowed for Jim Crow in the first place. Eugenics was state-sponsored in a large number of western nations, including the United States, and resulted in the forced sterilization of many minorities. In 1492, Queen Isabella and Ferdinand of Spain ordered the expulsion of every Jew from the country. And that was just one of a wide assortment of other anti-Semitic laws culminating in the Holocaust. Indeed, most genocides, from Rwanda and Sudan to Germany and the Ottoman Empire have been sanctioned by a powerful, centralized government. Needless to say, federal supremacy and the civil rights of minorities are not naturally in accord.

This is why some liberals such as Kirkpatrick Sale and Jeff Taylor support nullification. The Nation, known for its far left politics, accepts that:

…states’ rights is a constitutional, not political, issue, and the idea of a balance of power between the federal and state governments is neither conservative nor liberal at heart. It pertains to the theoretical process and function of government, not to the substantive, individual acts of governance themselves.

Indeed, it’s quite worth noting how some of the worst tyrants in history felt about states’ rights and nullification. Adolf Hitler’s thoughts on them were as follows:

National Socialism must claim the right to impose its principles on the whole German nation, without regard to what were hitherto the confines of federal states… The National Socialist doctrine is not handmaid to the political interests of the single federal states. One day it must become teacher to the whole German nation. It must determine the life of the whole people and shape that life anew. For this reason we must imperatively demand the right to overstep boundaries that have been traced by a political development which we repudiate.

In other words, federalism, states’ rights and any form of nullification are bad… if you’re a Nazi. A few others who have opposed federalism include Joseph Stalin, Vladimir Lenin, Pol Pot, Mao Zedong, Saddam Hussein, Benito Mussolini, Fidel Castro, Henry VIII, George III, King Leopold, Ivan the Terrible, Vlad the Impaler, Nero, Caligula, Napoleon Bonaparte, Idi Amin, Hirohito, Kim Il Sung, Kim Jung Il, and… need I really continue?

That may be a cheap shot, but still, nullification, aside by being used to defend runaway slaves and free speech, has been used to stop military conscription, tariffs and unlawful search and seizures. I would say those are civil rights-friendly policies. The nullification threats over conscription during the War of 1812 are very reminiscent of the civil disobedience over the military draft during the Vietnam War. And in both cases, they were effective. The federal government was unsuccessful in creating a draft for the War of 1812 and the draft was eventually abolished after furious protest and defiance in 1972.

Today, nullification is being used, in everything but name, on a whole host of matters from conservative issues such as gun rights, to liberal issues such as medical marijuana (California, effectively nullified the federal ban on it). Many states are considering challenging the porkfest of corporate welfare that is healthcare reform. The Real I.D. Act, which created a national ID card, was passed, but so many states have refused to implement it that the federal government has, at least for now, given up on it. There is quite a lot of nullification going on right now even as we debate whether or not it’s constitutional, racist or seditious.

Liberals, who are typically more likely to oppose federalism, should ask themselves whether or not nullification would allow states to defund the Iraq War, end the War on Drugs or eliminate the Patriot Act and the Military Commissions Act. The principle in and of itself can be used for good or bad, but centralized power tends to always be bad. As Tom Woods put it, “If you enter into a contract with somebody, never, ever would you say that the other party in the contract can exclusively interpret what it means… [when] the federal government has a monopoly on interpreting the Constitution… they’re going to interpret it in their own favor.” Given the horrific amount of damage a centralized government can do (according to R.J. Rummel, governments killed 262 million of their own citizens in the 20^th century alone), I think it’s safe to say we need every tool available to ward off unchecked government power.

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Intellectuals and Economics: Thomas Sowell Cuts Through the Fog

Intellectuals have some very bad incentives according to renowned economist Thomas Sowell. He defines an intellectual as someone’s who’s end products are ideas (i.e. not an engineer, scientist, medical doctor, etc.). While admitting that he himself is an intellectual, he condemns the lunacy that pervades much of the intellectual community. The problem is there are no checks on their ideas. If an engineer builds a bridge and it collapses, that engineer has failed. But how exactly do you judge a literary deconstructionist? Well, by what other literary deconstructionists think of their work, of course. It’s a revolving door of mindless group think and self-praise.

And if an intellectual pushes for certain policies that turn out to be disastrously wrong, they rarely face any ramifications for this whatsoever. For example, Paul Ehrlich claimed that “The battle to feed humanity is over… Population control is the only answer,” in his 1968 book The Population Bomb. Despite his prediction being astronomically wrong, Ehrlich’s career hasn’t been dinged by this misstep in the slightest. It would seem, as Eric Hoffer put it, “One of the surprising privileges of intellectuals is that they are free to be scandalously asinine without harming their reputation.”

Furthermore, intellectuals have an incentive to make things look as bad as possible. That, after all, gives them a reason to have a job. If things were all just fine and dandy, no one would ever want intellectuals to plan society for us. Thus, intellectuals put forth plans to fix the problems they dreamed up, such as income stagnation or the male-female wage gap, both of which are almost embarrassingly easy to refute. But since these fallacies got filtered down through the media by intellectuals over and over again, they have become ‘common knowledge’ among everyone else.

Here Sowell explains how intellectuals have treated the subject of economics:

For the complete interview, see here. And to purchase Thomas Sowell’s new book, where he takes intellectuals on from every angle, check out Intellectuals and Society.