The War on the West

Fascinating discussion worth the two hours.

My comments:

First, not sure why JP doesn’t understand the inequality problem. I think it results from the confusion sowed by General Equilibrium theory that has dominated macroeconomics. Inequality is a maldistribution problem characterized by Pareto distributions, 80-20, Power Laws, etc. where a small % of the population ends up generating and reaping most of the success. Dynamic Stochastic General Equilibrium theory can’t deal with maldistributions very well because of the constraints of its mathematical models, so it resorts to two unsatisfactory conclusions: it all depends on initial endowments, and in the long run inequality washes out (captured by the rags to riches to rags in 3 generations nostrum). These are unsatisfactory conclusions because they don’t address the dynamics of maldistribution.

Pareto distributions are natural phenomena: in biology Pareto found that 20% of the peapods produced 80% of the peas. This law is ubiquitous in nature because biology has determined that success breeds success in the interest of the species. In evolution, good genes prevail, bad genes disappear. This easily translates to financial capital. With market dynamics finance exhibits centripetal forces that draw wealth and success back to the center from the periphery. This yields the concentration of wealth. (Marx’s diagnosis was correct, his prognosis completely wrong.) With Amazon, Bezos just gets richer and richer. Same with Musk and Gates. In geopolitics, financial wealth concentrates in NYC, London, Frankfurt, formerly Hong Kong, Tokyo and draws wealth in from the periphery. This has economic and political consequences that contribute to the instability of the system.

For example, take the quintessential game of capitalism: Monopoly. At the end the winner ends up with all the wealth and the game is over. Monopoly is a finite game, but we want a free society to be an infinite game, thus the natural distributional dynamics of market systems must be addressed. Unfortunately, our financial system addresses those dynamics by making them far worse. Banks primarily lend money to people who don’t need it. Tax policy favors debt leverage, which concentrates risk and return. Policy corruption socializes risk and privatizes reward. You get the idea. Policy can address this injustice, but only if we understand it. It all depends on how we want to manage risk and uncertainty in a free society. There is an ironclad moral and behavioral law in finance (and in life): risk and reward go hand-in-hand, they can only be separated by violating this law.

For a discussion of Power laws see: Inequality, Power Laws, and Sustainability.

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I found DM’s comment about representation vs. achievement insightful. I think this is a product of modernization and excess information, whereby for meaning individuals start comparing themselves to the icons created by modernization. We see this in celebrity culture. We can’t all be born Michael Jordan, but we may be born black. So as a black male we can assume some of the glory of MJ. I live a stone’s throw from Hollywood and BH and I’ve always been amazed by the cachet afforded by merely observing a famous person on the street. People will breathlessly repeat who they saw walking down Rodeo Drive. My conclusion is that this association provides more meaning to their not-so-famous existence. Humans seek meaning in life, but modernization has twisted this into vicarious pleasures rather than true meaning. I believe the group mentality is a vain desire for greater meaning and a sign of the vacuum we have created in modern atomistic society. As JP has written and knows well, human meaning is achieved through the affirmation of creativity and love. This applies individually and socially. It is the biological imperative. We need to find our way back to true meaning rather than be absorbed by all these modern distractions.

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Lastly, DM hits upon the truth that doubt’s opposite is certainty. Faith is not certainty, faith is the acceptance of uncertainty. In a universe characterized by time and change, uncertainty is the only certainty. The challenge of life is to manage this uncertainty and its associated risks in a way that it does not consume us. I’m afraid we failed that test with the Covid pandemic. May we live and learn. DM’s book is definitely worth digesting, for everyone together on this planet.

The UnFree

I’ve been watching a bit of the original TV miniseries on Amazon, The Underground Railroad, because I always enjoy learning something new and interesting from historical narratives. Just today I read this article on The Conversation which is a nice review of the motivations and intentions of the writers and director. It also provoked some thoughts I’ll share here.

The Conversation – The Underground Railroad

I was struck by the following quotes about the director’s intention to present “slaves not as objects who were acted upon, but as individuals who maintained identities and agency – however limited – despite their status as property.”

The reviewer goes on to say,

In the past three decades there has been a movement among academics to find suitable terms to replace “slave” and “slavery.”

In the 1990s, a group of scholars asserted that “slave” was too limited a term – to label someone a “slave,” the argument went, emphasized the “thinghood” of all those held in slavery, rendering personal attributes apart from being owned invisible.

This makes perfect sense and should seem obvious. However, I believe the misuse or overuse of the label “slavery” has happened through associating it solely with the African/American experience, whereas enslavement has been inflicted upon many individuals and peoples across the world and across history. For sure, this docudrama is a narrative of the experience of black slaves on the North American continent, but its universalism should not be lost in that singular application.

I have emphasized the ideas of personal “identities and agency” in bold text above because this is really what applies to all people regardless of race or ethnicity. It also struck me that the appropriate term we are looking for is “The Unfree.” Every individual and oppressed group can relate to the idea of being unfree, if not enslaved. When you are unfree, you are deprived of free choice, free will, free agency, and the outward self-dignity imbued in that truest sense of human freedom. Historically and currently this condition is usually the result of a gross imbalance of power and a certain pathology of those who impose their unequal power over others. The history of the unfree applies to the ancient story of Spartacus, as well as any employee today preyed upon by an unreasonable boss.

This status of the unfree also highlights the fundamental condition of human identity, which is freedom. Freedom is what delineates our identities and personal agency in our lives, and it is sufficient in itself. In recent decades this truth has been twisted a bit to suggest that our chosen identities establish and signal our freedom, when actually it is only our freedom that helps guarantee the free and open expression of our identities. For example, one can assert one’s identity as “non-binary,” and the freedom of self-expression under the law defends the right to whatever that might be, but one cannot force others to use the preferred pronoun, that is not within the power of the state or any other entity without violating the basic tenets of freedom.

This is important because politics can intervene with laws and enforcement to guarantee our freedoms, but it cannot define or defend our personal identities or our self-dignity. As The Underground Railroad narrative demonstrates, slavery could not deprive the unfree slaves of their identities and their self-dignity, unless the individual allowed it. The oppressors can take away physical freedom, humiliate, and even impose a death sentence, but they cannot take away the freedom to think freely and the self-dignity of the oppressed. We witness these truths again and again in the stories of Holocaust and Gulag survivors.

It is also interesting to note that ideologically the primacy of freedom as a value tends to delineate today’s liberals and conservatives, as noted by Jonathan Haidt in his studies of political identity. Liberty is the primary moral value to those who identify on the right, while fairness and human caring are the dominant values asserted by many on the left. Leftists might argue that one cannot be free in an unfair society, but that only means we have to focus on freedom as a precondition to fairness. The issue of slavery the unfree, in universal world history as well as African American history, should enlighten us to the primary ordering of moral values: one cannot have fairness without the precondition of freedom, and without the precondition of freedom, fairness has no meaningful relation to our concepts of justice. (Unfortunately, this only hints at another discussion on the differences between fairness and justice, and the unnecessary qualifiers applied to the universal singular idea of moral justice.)

Lastly, this rich portrayal of the unfree escaping the bonds that defined them by preserving and expressing their self-dignity and personal agency provides the correct lesson on the true legacy of the American experiment – not that one group of our fore-bearers oppressed another, but that they both evolved under a constitutional system of laws to continue to progress toward a society of true liberty and justice for all. We have not arrived, but we are on the right track.

On Thomas Sowell

This is a nice review of a biography of one of the pre-eminent economic intellectuals of our time, Thomas Sowell.

The triumph of Thomas Sowell

newcriterion.com/issues/2021/6/the-triumph-of-thomas-sowell

Features June 2021

Thomas Sowell. Photo: Free to Choose Network.

by John Steele Gordon

On Maverick: A Biography of Thomas Sowell, by Jason L. Riley.

Thomas Sowell is one of the towering American intellectuals of our time. An economist trained at the University of Chicago and a social theorist of the first rank, he has been a senior fellow at the Hoover Institution at Stanford University since 1980.

He has written an astonishing fifty books (if you count revised and expanded editions), numerous essays, and a long-running, twice-a-week newspaper column. Extraordinarily wide ranging, he has covered everything from the rudiments of economics to race relations, the housing crisis of 2008 to late-talking children.

His best known book, Basic Economics (2000), a best-selling, chart-, graph-, and jargon-free introduction to the subject, is now in its fifth edition and has been translated into seven languages.

No less an authority than Milton Friedman, who taught Sowell at the University of Chicago, has said that “The word ‘genius’ is thrown around so much that it’s becoming meaningless, but nevertheless I think Tom Sowell is close to being one.”

So it’s about time for there to be a biography of this remarkable man, although it should be noted that Maverick is far more an intellectual biography than a personal one.1 And we should be grateful to Jason L. Riley for writing a very good one. Riley is the author of Please Stop Helping Us: How Liberals Make It Harder for Blacks to Succeed (Encounter). He is also a senior fellow at the Manhattan Institute and a columnist at TheWall Street Journal.

Sowell’s life did not get off to an easy start, to put it mildly. In 1930, the year he was born into a black family in Gastonia, North Carolina, the Great Depression was gathering strength. And Jim Crow was in full force, so he seldom encountered white people in his early years. As Riley explains, “He’d been turned away from restaurants and housing because of his skin color. He’d felt the pain and humiliation of racism firsthand throughout his life. He needed no lectures from anyone on the evils of Jim Crow.”

His father had died a few months before his birth, and his mother, a housemaid, already had four children. So he was raised by a great-aunt.

The family moved to Harlem when he was nine, part of the great migration of black families from the South to the North in search of greater opportunity in those years. Forced to drop out of high school to get a job, he only went to college after a stint in the Marines during the Korean War.

He was the first member of his family to get beyond the seventh grade, and he was ignorant of even the basics of higher education. At first he thought that professors who were addressed as “doctor” were physicians as well as professors. “It came as a revelation to me that there was education beyond college,” he wrote, “and it was some time before I was clear whether an M.A. was beyond a Ph.D. or vice versa. Certainly I had no plans to get either.”

At first he attended night classes at the historically black Howard University. There, his professors noted his remarkable intellect and capacity for hard work and helped him transfer to Harvard the next year. He thrived there intellectually and graduated at the age of twenty-eight magna cum laude.

But he was less enamored of the social atmosphere in Cambridge. Sowell noted that he “resented attempts by some thoughtless Harvardians to assimilate me, based on the assumption that the supreme honor they could bestow was to allow me to become like them.”

Chicago was not an imitation of anything. It was wholly itself.

He got his master’s degree the next year at Columbia and intended to get his doctorate there as well, so he could study under George Stigler, who had written an essay on the early economist David Ricardo that Sowell had greatly admired. (It might be noted that the very first quotation in Sowell’s Basic Economics, written many years later, is from George Stigler.) But when Stigler (who won a Nobel Prize in 1982) moved to the University of Chicago, Sowell followed him there. He was very glad he did.

For while Sowell thought Columbia was a sort of a “watered-down” version of Harvard, Chicago was not an imitation of anything. It was wholly itself.

And the economics department was extraordinarily rigorous. Ross Emmett, an authority on the economics department at Chicago, told Riley that “During that period of time, Harvard took in twenty-five to twenty-seven students and graduated twenty-five of them, whereas Chicago took in seventy students and graduated twenty-five of them.” In the fifty-two years that Nobel Prizes in economics have been awarded, no fewer than thirteen have gone to scholars associated with the University of Chicago.

Although Chicago has long been the center of the study of free-market economics, Sowell was a Marxist in his twenties. He explained that, when working as a Western Union messenger after he left high school, he would sometimes ride the bus from the Wall Street area to his home in Harlem. The ride took him past the upscale department stores on Fifth Avenue, past Carnegie Hall, and through the affluent residential neighborhoods of Riverside Drive. “And then,” Sowell wrote, “somewhere around 120th Street, it would cross a viaduct and onto 135th Street, where you have the tenements. And that’s where I got off. The contrast between that and what I’d been seeing most of the trip really baffled me. And Marx seemed to explain it.”

But then he took a summer job at the U.S. Department of Labor in 1960, when he turned thirty. Even after a year at the University of Chicago, including a course under Milton Friedman, Sowell had “remained as much a Marxist as I had been before arriving.”

He spent the summer analyzing the sugar industry in Puerto Rico, where a minimum wage was set by the U.S. Government. It wasn’t long before he noticed that as the minimum wage had risen, the number of sugar workers fell. He had always supported minimum wages, assuming they helped the poor earn a decent living. But now he realized that minimum-wage laws cost jobs and were a net detriment to the poor.

“From there on,” Sowell wrote, “as I learned more and more from both experience and research, my adherence to the visions and doctrines of the left began to erode rapidly.”

Soon, Sowell was “rethinking the whole notion of government as a potentially benevolent force in the economy and society.” He also couldn’t help noticing that his fellow bureaucrats did not care if the minimum wage helped workers. Their job was to enforce the laws. It was not to see if the laws did any good.

“It forced me to realize, Sowell wrote, “that government agencies have their own self-interest to look after, regardless of those for whom a program has been set up.” Marxist theory ignores the powerful force of self-interest in the working of economies, and Sowell came to realize the centrality of self-interest to the human universe.

At Chicago, Sowell studied the history of ideas under the great Friedrich Hayek, but it was Hayek’s own ideas that had lasting consequences for him. Hayek’s essay “The Use of Knowledge in Society” dealt with how the information used to make economic decisions spreads through an economy. Its central insight is that knowledge is highly dispersed and no one person or group can possess all the knowledge needed to make good economic decisions. Therefore, he argued, the decision-making process should also be decentralized, the opposite of what Marx argued for.

Later, when Sowell was asked to teach a course on the Soviet economy, the significance of Hayek’s essay hit home:

I could see what the factors were that led the Soviets to do what they were doing, and why it wasn’t working. There was a knowledge problem that was inherent in that system. In a nutshell, those with the power didn’t have the knowledge, and those with the knowledge didn’t have the power.

Out of this came one of Sowell’s most important books, Knowledge and Decisions (1980), which extended Hayek’s work and, as Riley says, “would do so in ways that even Hayek had never contemplated.”

In hopes of reaching a wider audience than Hayek, who wrote in the technical language of economics, Sowell’s book, in “lieu of graphs and equations . . . offers rich metaphors and copious real-world examples that make the weightier concepts under discussion not merely digestible but tasty.” This appeal to a wider audience is no small part of the reason that Sowell has been so influential.

Another is that, while an economist by training, Sowell’s mastery of subjects is far wider. Gerald Early, of Washington University, noted that his expertise extends to sociology and history as well. “He had some kind of mastery of other fields to do the kind of comprehensive stuff he was doing. Whether you agree totally with his ideas or not, it was impressive what he was doing. Who knew an economist could write that stuff?”

Indeed, far too many economists can’t write, period. Sowell most certainly can. Early, who is black himself, noted that “I knew lots of black people who were not academics and who had heard about him and were reading his stuff because it was accessible.”

Another thing that distinguishes Sowell from all too many other economists is his insistence that theory be tested in the real world. Gunnar Myrdal, who won the Nobel Prize in economics in 1974, for instance, argued that third-world countries could not develop without extensive foreign aid and much central planning, despite the fact that post-war Japan, Taiwan, South Korea, and Singapore did exactly that in the late twentieth century.

“I got no sense,” Sowell wrote, “that Myrdal actually investigated these theories of his and compared them with anything that actually happened. I myself, of course, started out on the left and believed a lot of this stuff. The one thing that saved me was that I always thought facts mattered. And once you think that facts matter, then of course that’s a very different ball game.”

Myrdal and his type are essentially theoretical in their approach to economics. Sowell, like Stiller, Hayek, and Friedman, is empirical, demanding real-world proof, not just elegant ideas.

“The market can be ruthless in devaluing degrees that do not mean what they say.”

Sowell has always regarded himself as fortunate that his higher education came before the era of affirmative action, which he regards as an unmitigated disaster for blacks. In his memoir, My Grandfather’s Son (2007), the Supreme Court Justice Clarence Thomas recalled how shocked he had been when his law degree from Yale and his sterling grades failed to impress the white-shoe law firms where he applied for a job. “Now I knew what a law degree from Yale was worth when it bore the taint of racial preference,” he wrote.

But Sowell had predicted this in the very first days of affirmative action. “The double standard of grades and degrees is an open secret on many college campuses, and it is only a matter of time before it is an open secret among employers as well,” he predicted in 1970. “The market can be ruthless in devaluing degrees that do not mean what they say. It should be apparent to anyone not blinded by his own nobility that it also devalues the student in his own eyes.”

One of Sowell’s most important contributions has been to notice how wide the gap often is between ordinary black Americans and black intellectuals and civil rights leaders. In a pair of op-eds in The WashingtonPost in 1981, Sowell wrote that

Historically, the black elite has been preoccupied with symbolism rather than pragmatism. Like other human beings, they have been able to rationalize their special perspective and self-interest as a general good. Much of their demand for removing racial barriers was a demand that they be allowed to join the white elite and escape the black masses.

In other words, they have been all too anxious to do what Sowell had spurned doing many years before at Harvard.

In fact, Sowell doesn’t have much use for the pretensions of intellectuals of whatever color. Perhaps my favorite quote in Maverick is used by Riley to open his chapter on “Sowell’s Wisdom”: “Some of the biggest cases of mistaken identity are among intellectuals who have trouble remembering that they are not God.”

In this short, well-written book, Jason Riley leads the reader on an enlightening tour of the thought and experiences of one of the most luminous minds this country has produced.

It should cause many readers to explore the works of Thomas Sowell. They will be richly rewarded for doing so.

1Maverick: A Biography of Thomas Sowell, by Jason L. Riley; Basic Books, 304 pages, $30.

The Real Tragedy of Chauvin-Floyd

With the verdict received in the trial of Derek Chauvin one could hope that a certain sense of justice had been dealt for the death of George Floyd. Mr. Chauvin was certainly guilty of a crime, though it is beyond my purview to decide exactly what that crime was. In any event, the jury made its judgment. But where do we go from here? Apparently, many of our political leaders could not resist voicing their opinions from the safe perch of social media, mostly echoing the overarching assumption of systemic racism, not only in law enforcement, but throughout American society. The most florid Rep. Alexandria Ocasio-Cortez tweeted that “this verdict is not a substitute for policy change.” I think perhaps we might be able to converge on that sentiment, provided it is based on reasoned logic rather than virtue signaling.

Because our media hypes emotional reactions over reasoned analysis, we end up focused on the symptoms rather than the causes of our social troubles. The problem of policing starts at the beginning, not the end, of the story. And at the beginning there are two primary causes, identified by social scientists such as Daniel Moynihan, Thomas Sowell and Charles Murray and affirmed by empirical data: First is the disintegration of urban black families under the direction of welfare state policies instituted back in the 1960s in response to E. Michael Harrington’s (no relation) The Other America. Economist Thomas Sowell has documented the evidence that black families were more intact with two married parents before the Great Society and marks the mid-1960s as the inflection point. The incentives provided by programs such as Aid to Families with Dependent Children, which grew enormously during the decade after 1965, occasioned a virtual explosion of births to unmarried mothers. From 10% of all births of all races in 1970 to 41% in 2010. But for black mothers the increase was from 38% in 1970 to 72% in 2010, meaning that almost 3/4s of all births in the black community today are to unmarried mothers.

Beside the effects of welfare dependence, other factors likely include the decline of marriageability of black fathers due to lack of job opportunities, to changing sexual mores and behaviors. But no matter the cause, these trends demand a policy response to the break-up of family institutions that ensure social stability and upward mobility. As a Brookings report as far back as 1996 admits below, that policy response has been lacking, and perhaps can be attributed to the second cause of urban decay.

“If we have learned any policy lesson well over the past 25 years, it is that for children living in single-parent homes, the odds of living in poverty are great. The policy implications of the increase in out-of-wedlock births are staggering.”

Brookings Policy Briefs

This second cause can be traced to the redirected spending priorities of urban political machines under the cover of the liberal welfare state. The urban political machines that characterize politics in cities such as Baltimore, New York, Chicago, Detroit, Minneapolis, San Francisco, Los Angeles and other large metro areas are run primarily for the benefit of organized public unions such as teachers, police, fire, waste disposal, and municipal workers. As they say, let’s follow the money.

In 1962, President Kennedy issued an executive order recognizing the right of federal and public sector employees to unionize and bargain collectively over labor contracts. This opened a Pandora’s Box that I suspect JFK would have strongly regretted had he lived to see the result. When public union officials bargain with politicians the only ones with skin-in-the-game are not even at the negotiating table. That would be the taxpaying citizens. Politicians who need votes and campaign funds for re-election readily grant contract conditions that never need to be rationalized financially and push serious liabilities—such as pensions and healthcare—off to the future (when they conveniently will no longer be in office). In return, they receive campaign funds and votes delivered by unions. The result has been serious deficits for municipalities that require a re-orientation of spending priorities – away from the dependent poor and necessary municipal services towards servicing public sector union wages and benefits. For those who have retired after 25 years of service, it has been a bonanza.

The budget squeeze has had the most deleterious effect on public schools that the urban poor depend upon to educate their children and free up parents to support a family. The performance failure of urban public schools is legendary and has now been exposed to all with the recent pandemic lockdown. In Los Angeles, where the United Teachers of Los Angeles holds sway over the public schools, only 35% of a $7+ billion budget goes to teacher salaries, with the bulk going to administrative salaries, pensions, and benefits. This has created a two-tier seniority system that characterizes most public unions today where legacy members receive most of the value while new hires do all the work and receive far less. The strain on resources means the students and their families end up with the short end of the stick.

Now let us connect the dots. The breakdown of urban families and the narrow self-serving policies of urban political machines have left young urban minorities with slim possibilities of becoming productive citizens and leave them mired in poverty and despair. Without a decent education and stability in the home, black youths face dismal opportunities in a society where intellectual skills have become a necessary passport to success. Is it any wonder they turn to a lucrative culture of crime and illicit drug markets with all the propensities for violence?

Faced with this violent crime problem, city officials then task law enforcement agencies and the criminal justice system to clean it up, or at least keep it under control. Is it any wonder that confrontations between police and young black men and women dominate our crime incidents? And that a regrettable number of mistakes occur under harrowing conditions that prove fatal to both police and alleged perpetrators? That young black men populate our prisons and become more criminalized? Police and innocent bystanders have to put their lives on the front line in this battle for order, but bureaucrats and politicians who have failed us all along are comfortably ensconced with high paying jobs and sinecures. And the destructive policies continue.

To ignore this reality for an unprovable narrative of “systemic racism” is the true tragedy of the Chauvin-Floyd affair. In essence, they are both victims of an urban society that has failed us. As I mentioned at the beginning of this essay, perhaps AOC is correct about the need for policy change. She is most certainly correct, but not in the way she intends. With the empirical evidence of the past half century, one can make the case that the only truly racist institutions in America today are the public education system run by teachers’ unions and the welfare state run by public sector unions and their political cronies. The policy changes needed are school choice and constraints on public sector union bargaining. It’s high time those of us with skin-in-the-game took notice and demanded the right kind of policy changes.

Facing Facts About Race

hoodie

Last week President Obama weighed in again on the Trayvon Martin episode. Sadly, most of what he said was wrong, both literally and ethically.

I don’t usually post about cultural politics but I link to this truly excellent article by Victor Davis Hanson published by National Review Online, regarding an ongoing tragedy that has sucked a lot of oxygen out of our public discourse.