Posted by on August 14, 2016

This title, a quote from the Bill Murray character in Stripes after a particularly rough day, continues the upbeat tone of my last blog.  If you read the news, then depression is the only logical emotion.

More PC Madness and Hypocrisy

The Claremont Colleges are a collection of five liberal arts schools in California – which must make them the epicenter of PC nonsense.

The schools have recently made the news when a group of students posted on Facebook looking for off-campus roommates, with the restriction of “POC only.” For those who don’t speak PC-ese, this means “people of color only.”  And just to make it crystal clear, the author added “I don’t want to live with any white folks.”

The author, and those who rushed to defend her, insisted that this wasn’t racism, but rather “self-preservation.”  POC, it seems, have a right to “protect themselves” with “safe spaces.”  Besides, said one defender, “[r]everse racism isn’t a thing.”

But it gets better.  One of the commentators was identified as a Women’s Studies major.  Another, identified as an Africana Studies major, posted this gem:

White people always mad when they don’t feel included but at the end of the day y’all are damaging asf[1] and if a POC feels they need to protect themselves from that toxic environment THEY CAN! Quick to try to jump on a POC but you won’t call your friends out when they’re being racist asf.  I’m not responding to NO comments and NOPE I don’t wanna have a dialogue.

These functional illiterates will soon be graduating with their useless degrees, funded with government loans they will never repay.  They will be unemployable, having learned nothing except an outsized sense of self-worth.  They will form a solid part of the Democratic Party base, where they will do their best to vote themselves a larger portion of the wealth created by the productive parts of society to which they have no hope of ever belonging.

But on the brighter side, it appears that alumni are finally crying “enough” and using the only weapon at their disposal: the power of the purse.  The New York Times has just run an article about a drop in alumni donations.  The article quotes a number of alums who specifically identify the PC madness as the cause for their stinginess.  One Yale refusenik, for example, stopped donating after being on campus when activists tried to shut down a conference on free speech “because they apparently missed irony class that day.”

When it comes to my school, the notorious Bowdoin College, I have been in this camp for years.

Meanwhile, a tweet that sums up the situation well is making the rounds in the libertarian blogosphere:

Adolf Hitler is the story of a failed liberal art student who blamed it on ethnicities he deemed privileged.

Olympics

I have only been intermittently watching the Olympics in Brazil, but even here there are economic lessons to be learned.

The Olympics were awarded to Brazil back in the heady days of 2008, when euphoria for the country was running high.  The International Olympic Committee (IOC) had neglected to learn one of the key lessons of this blog: culture matters a great deal.  And it does not change overnight.

Or, as the Latin Americans put it, “God gave so much to Brazil that he had to give it the Brazilians to even things out.[2]

And so, as The Wall Street Journal reports, we have mysteriously green swimming pools, polluted water sport venues, transport nightmares, deplorable and unreliable food service, scheduling mishaps and security concerns.

This also goes to show that it is a lot easier for an emerging economy to catch up in manufacturing than it is in services.  A country can approach the leading edge in manufacturing by importing world-class production goods.  However, it is a lot harder to inculcate the education, discipline and habits that produce a world-class service economy, a fact that Brazil has just demonstrated.

The IOC has more or less said that its experiment in expanding the Olympics to an emerging market will not be repeated.  Let’s hope that this small victory of reason over wishful thinking will spread.

Housing Costs

There has been some good stuff on housing costs lately, showing once again that this assault on the young and the middle class is entirely the government’s fault.

Alex Tabarrok is a professor at George Mason University who blogs with Tyler Cowen at the excellent Marginal Revolution site.  If you are on the search for witty and incisive relief from something like Paul Krugman’s Conscience of a Liberal column – as you should be – this is a great place to look.

Tabarrok has just published a short article entitled “Why Isn’t Rent in Tokyo Out of Control?”  The answer is simple, of course.  In Tokyo, a city of 13 million people and no empty land, there were 142,417 housing starts in 2014.  Compare this to the 83,657 housing permits issued in California (population of 38.7 million and a landmass 12% bigger than the entire country of Japan) and the 137,010 houses started in all of England (population of 54.3 million).

The consequence of this has been house prices and rents that have only increased moderately during the last 20 years.  And this is not a question of a falling population: as with nearly all “gateway” cities, Tokyo has continued to see an influx of population.  It is simply due to the fact that the zoning and construction rules in Tokyo allow developers to respond to demand.  In the words of one Japanese expert:

To help the economy recover from the bubble, the country eased regulation on urban development.  If it hadn’t been for the bubble, Tokyo would be in the same situation as London or San Francisco.

Public Pensions

I have written before about the absurdities of the accounting for pensions, particularly the elevated and financially illiterate discount rate that public pensions are allowed to use.  Not only does this mask the true cost of these liabilities but The Economist reports that it also distorts investment behavior.

The article is entitled “Putting it all on red – The rules encourage public-sector pension plans to take more risk.”  It describes the results of a recent academic study which finds that public funds pursue investment strategies that are consistently riskier than their private counterparts, almost certainly to try to make good their impossibly optimistic return assumptions.

Contrary to financial theory, public funds increase their allocation to risky assets as liabilities start to come due, whereas private funds do the opposite.   The public funds have also responded to lowered interest rates by increasing their risky investments, even though financial theory would say that the returns on all assets should rise and fall in response to a general move in rates, thereby logically leading to no change in allocation.  Finally, the authors of the study find that there is a relationship between the composition of the funds’ boards of trustees and the riskiness of their investments: more politicians translate into riskier portfolios.

If something like this happened in the private sector, the Elizabeth Warrens of the world would be hasty with the legislative pen.  Let’s see how long it takes – and how many disasters – before the government reforms itself.

Looting and Predation

I have made many attempts to have things published in the WSJ, with only minimal success.  This is especially frustrating because I am often ahead of their editorial staff in identifying and discussing issues.  The latest is an editorial entitled “The Looting of Volkswagen,” which makes more or less the same points, and uses many of the same examples, as my “When Will They Get Tired of the Predation?”  Which I posted about a month ago.

Take heart, WSJ, you have been further behind in the past.

Nudging

One of the hot (and controversial) topics in economics these days is “nudging.”  This is defined in Wikipedia as:

Nudge theory (or Nudge) is a concept in behavioral science, political theory and economics which argues that positive reinforcement and indirect suggestions to try to achieve non-forced compliance can influence the motives, incentives and decision making of groups and individuals, at least as effectively – if not more effectively – than direct instruction, legislation, or enforcement.

We may have recently seen a successful case of nudging in the UK.  Or at least a case where incentives seem to have triggered a very disproportionate response.

In October of last year, the UK introduced a five pence (about seven American pennies) charge for plastic bags from supermarkets and other large stores.  The impact has been dramatic: The seven biggest retailers gave out seven billion bags in 2014.  In the six months after implementation of the charge, they have given out half a billion, an annual run rate 86% lower than before the change.

This blog often argues that incentives matter.  Interestingly, this appears to be a case where incentives reinforce psychology, producing a result much stronger than either would in isolation.  For years, governments have tried exhortation to reduce the use of plastic bags.  All for nought without the addition of a little financial “nudge.”

Swimming Accommodation

The city of Luton in the UK, which has a large Muslim population, has just introduced men-only times at its best swimming pool for “cultural reasons.”  This has, not surprisingly, enraged the local non-Muslim population.

I am convinced that one of the reasons for the growing resentment against immigrants is the left-wing doctrine of “accommodation.”  This has replaced the earlier notion of “the melting pot,” a phrase that has just been banned by a professor at the University of Florida.

The growth of accommodation can produce only one thing: the type of anti-immigration backlash that fuels Brexit and Donald Trump.  The PC crowd will achieve the exact opposite of its objectives.

Vietnam

The Economist has just run a highly laudatory article on Vietnam.  Having visited this country in the spring of this year, I couldn’t agree more.

Since 1990, Vietnam’s growth has averaged 6% per year, second only to China, on the back of market liberalization.  Vietnam has a large, young and highly entrepreneurial population, with a long history of craftsmanship.  Vietnam has invested heavily in education – and I guarantee you that it is not for Womens’ Studies or Asiana majors.  The central government has decentralized functions to the regions and encouraged them to compete for business.  The country has encouraged free trade and foreign direct investment.  Although there have been some stumbles – notably a real estate bubble which has left the banking sector with a lot of bad assets – in general the government has provided stability and a reasonable rule of law.

Other than its natural beauty, which greatly helps the tourism industry, Vietnam has no natural resources to speak of.  Brazil, conversely, has everything.  Yet, only a fool would bet on Brazil over Vietnam.  Because culture matters a great deal.

Roger Barris

Weybridge, United Kingdom

I Wish That I Had Said That…

“Civilization is the progress toward a society of privacy.  The savage’s whole existence is public, rule by the laws of his tribe.  Civilization is the process of setting man free from men” by Ayn Rand

 

[1] “As fuck,” according to my Urban Dictionary

[2] I have also heard this saying with Argentina as the target.  It works in both cases.

print

Comments

  1. Neil Winward
    August 14, 2016

    Leave a Reply

    Roger (recommended to your blog by Tom Saykak)

    On getting published in the WSJ, it might be as simple as more punchy titles! Easily fixed.

    • Roger
      August 15, 2016

      Leave a Reply

      That’s a nice thought, but I think the problem is bigger than that. And, after all, what could be punchier than “What Fresh Hell Can This Be?” or “And Then…Depression Set In.” I will keep plugging away.

Leave a Reply

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>