Luise Rainer, one of the greatest of Hollywood actresses and the first performer to win back-to-back Oscars, has died at 104:

Luise Rainer, the luminous 1930s actress who won two consecutive Oscars but whose Hollywood film career was shattered when she went toe-to-toe with Louis B. Mayer, and lost, has died. She was 104.

Her movie career ended when she ran afoul of studio mogul Louis B. Mayer. She wanted better parts; he told her that he made her and he could break her. He was right.

Ms. Rainer’s screen performances are all subtle and full of heart-breaking emotion. A great. Why she didn’t play Madame Curie (for example), a role for which she was perfectly suited, instead of Greer Garson can only be explained by Mayer’s pettiness. I’m convinced that if she had taken a movie role in, say, 1990, she’d have won another Academy Award.

Sometimes I don’t know which I find more gobsmacking. That California, as different as it is from the other states in size, geography, economy, and demographics could be a model for the balance of the country or when people don’t understand the implications of their own arguments. At Pacific Standard Magazine Sam Quinones explains how California has reduced its gang problem. Here’s the slug:

Los Angeles gave America the modern street gang. Groups like the Crips and MS-13 have spread from coast to coast, and even abroad. But on Southern California’s streets they have been vanishing. Has L.A. figured out how to stop the epidemic it set loose on the world?

It’s an interesting article and one I’d encourage you to read in full.

However, I don’t think Mr. Quinones appreciates the full implications of his argument. He paints a picture of gang culture as being born of the immigrant experience:

Literature about street gangs in the United States dates back at least to the 19th century, when diverse groups of immigrants began settling en masse in the tenements of New York. The reformer and muckraker Jacob Riis, who spent decades among the city’s poor, saw the gang as a temporary product of dislocation, something that “appears in the second generation, the first born upon the soil—a fighting gang if the Irishman is there with his ready fist, a thievish gang if it is the East Side Jew—and disappears in the third,” as he wrote in the Atlantic Monthly in 1899.

In Southern California, street gangs had a later start, and many histories trace them to the 1920s, when groups of Mexican American teenagers began to band together in shared ethnic alienation. California’s early Chicano gangs usually restricted their violence to the use of fists, chains, and knives. Guns were rare, and shootings were seen as unmanly. Black gangs, which began to form following a great migration of African Americans to Los Angeles after the Second World War, were also subdued in comparison to their later incarnations.

and then proceeds at some length to explain the evolution of Southern California’s approach to police work and how that has affected Southern California gangs.

It seems to me there is an obvious counter-argument. It may be that Southern California’s experience with gang has little to do with policing and everything to do with immigration. According to the Pew Research Center (see the graph on page 9) immigration from Mexico (the source of most of Southern California’s immigration) peaked in 1999 and has been declining sharply since then. In other words it might be the case that Southern California gangs are seeing precisely the development outlined above, we are now somewhere between the second generation and third generation, and the clearest way to control gang violence, at least in the long term, is by controlling immigration.

But this is where the difference between California and the rest of the country comes into play. California’s black population is about 6.5%. That’s about the same as Rhode Island or Kansas and a lot different from the national population of about 12.5%.

I think that it’s obvious that urban black gangs (the kind we have in Chicago) are completely different from immigrant gangs and I suspect that they’re different from Mexican-American gangs. I’m not sure much can be generalized from Southern California to Chicago.

As I see it street gangs are not a product of the immigrant experience but more generally a product of social dysfunction. The social dysfunction in Southern California is driven by immigration and an ongoing stream of new immigrants while the social dysfunction here in Chicago has both external causes, racism, and internal causes as Pat Moynihan pointed out in The Negro Family: the Case for National Action a half century ago.

Fifty years later many of the things that Pat Moynihan cautioned about in the Moynihan Report are occurring within the non-black population as well as the black population and it will be interesting in a coldblooded sort of way whether we see a rise in the number of native white street gangs in coming years.

As I was writing the last post it occurred to me that if the Obama Administration’s extremely expansive view of regulation is allowed to stand, we’re probably going to see a lot more moves by businesses, particularly the largest businesses, to encourage federal agencies to, well, see things their way. Not that they’ve been reluctant to do that. It’s called “regulatory capture”. The SEC and FCC have been controlled by the industries they were supposed to regulate for decades and corruption and regulatory capture of the the Minerals Management Service which was supposed to control the oil companies was one of the factors that allowed the Gulf Oil spill of a few years back.

You think you’ve seen suborning of federal agencies? You ain’t seen nothing yet.

Federal regulations are not only a great way of underwriting your business model, they’re an even better way of beating down upstart competitors or organizations that might object to your business model. Why compete when you get the federal government to act as your bully boy?

That the corporate income tax should be abolished is something I’ve said around here any number of times. I think that the corporate income tax should be abolished and the personal income tax, particularly on the highest income earners, should be raised commensurately. IMO we should give Warren Buffett what he says he wants and impose a tax of 10% on gross incomes of $100 million or more. It would be an interesting experiment. I think we’d be amazed at the rate at which the .1% would flee the United States and/or how fast their incomes would fall.

In the Wall Street Journal John Steele Gordon offers ten reasons to abolish to corporate income tax. Some of them are good ones. It would reduce the complexity of the tax code and render many lobbyists obsolete. And it would obviate the distinction between for-profit and not-for-profit corporations. The enormous salaries paid to the heads of United Way or the Red Cross make a mockery of the notion of “not-for-profit”.

However, I find some of his arguments pretty dubious. For example:

Fourth, with suddenly increased profits, corporations would increase both dividends and investment in plant and equipment, with very positive effects for the economy as a whole and increased revenue to the government through the personal income tax.

If Mr. Gordon has evidence that corporations increase their U. S. investment in proportion (or even fractionally for that matter) to after-tax profits, I’d certainly like to see it. I think that companies increase their investments based on perceived return rather than on the basis of after-tax profits.

Or this

Fifth, stock prices, which are a function of perceived future earnings, would rise substantially, inducing a wealth effect as people see their 401(k)s and mutual funds rising in value. That would lead to increased spending and thus increased tax revenues.

Stock prices are rising pretty fast right now even with corporate taxes. Are stock prices really “a function of perceived future earning”? Or are they stores of value? Or irrational, something for which there is pretty fair evidence? I’d really like to see some quantitative arguments here.

In the final analysis I think that we’ll have a corporate income tax for the foreseeable future for the very reason that Mr. Gordon gives as his tenth reason to abolish the corporate income tax:

Tenth, eliminating the corporate income tax would deal a blow to crony capitalism. Most U.S. government favors to industry are in the form of favorable tax treatment. Most subsidies for politically fashionable but otherwise unprofitable technologies, such as wind and solar power, are also part of the ever-expanding corporate tax code. No corporate tax code, no favorable tax treatment and no subsidies, except direct ones, which would be much easier to hold to political account.

Without the corporate income tax, Congress would have far weaker arguments for extracting contributions from corporate contributors and far fewer opportunies for lining their own pockets persuading companies to contribute to their re-election campaigns.

That’s the real irony. Most of the reasons we should abolish the corporate income tax are the very reasons the corporate income tax will never be abolished.

I took the opportunity that the brief down time I mentioned earlier has afforded me to do something I’ve been putting off. I cloned the hard drive on my primary workstation to a good-sized solid state drive and removed the old hard drive. I was down to about 10% free space available and it was pretty much a necessity. Windows starts getting cranky at under 15% available space.

The process was a terrible pain in the rear end involving a lot of crawling around on the floor and grumbling, being nagged by impatient dogs, and answering telephone calls and texts that are coming in a neverending stream but it’s done and appears to be working. The system now boots in about a third of the time.

I wouldn’t have installed a SSD as my primary drive a few years ago but the technology has come a long way since then I thought I’d give it a try. I’m also thinking about investigating the cost of mirroring my whole danged drive up in the cloud. That would provide a certain amount of reassurance just in case. I’ve already got automated cloud backup (which I’ve rarely had occasion to go back to) but I know from experience that reinstalling and reconfiguring all of my software can take an enormous amount of time. And expense.

Update

That really perked up Dragon Age: Inquisition. That wasn’t my primary objective but it’s nice.

Here’s the Wall Street Journal’s take on the collapse of a healthcare insurance company serving Iowa:

Liberals claim ObamaCare is “working,” whatever that means, but the reality is that the law is seeding the insurance markets with land mines that will explode over time. The sudden detonation of a taxpayer-backed insurer in Iowa and Nebraska is an early warning.

and

Yet the rational calculation is to game ObamaCare’s rules to undercut competitors and capture market share. If premiums don’t cover claims, the deficit can be absorbed by ObamaCare’s reinsurance and risk corridor and adjustment programs that are supposed to provide a safety net against major insurer losses.

But CoOpportunity flew too close to the sun. The company’s reserves fell 66% between January and October, and then cash on hand and assets plunged to $17.2 million in December from $47 million in October as costs swamped premium revenue. A $125.6 million payout from reinsurance can’t legally be made until late next year. CoOpportunity asked HHS for an emergency bailout, which was denied in mid-December as the result of restrictions on co-op and reinsurance financing that Congress passed over the last two years.

The recklessness of CoOpportunity and its federal enablers is unfortunately now mundane. There will be more such failures in the years ahead.

I wonder if those are really what’s motivating insurance company executives? Maybe that with a large dollop of IBGYBG.

As you may have gathered from my posting schedule this morning, I have a little down time. The contract I was working on downtown has officially ended. I still don’t feel at liberty to tell you the details of what I was doing but suffice it to say that I now have an insider’s view of Illinois’s activities in implementing the PPACA. I’ve been of considerable help to my client and it’s honestly too bad they didn’t bring me in a year ago.

My experience for the last three months also fully supports a claim I’ve made from time to time that, if they’d called me in to manage the project, Healthcare.gov would’ve worked fine straight out of the box.

I do feel at liberty to share with you one insight I’ve gained. There is apparently a known way to build a state healthcare insurance exchange website that flops: do it yourself. That’s what Oregon did. All of the states’ healthcare insurance exchanges that worked the best were apparently built by the technical wing of the same accounting company.

One more thing: a plurality of the states’ exchanges were built using WordPress, the engine that powers this blog.

I wonder how long it will take before American politicians and diplomats take heed of this advice:

To the Chinese Communist Party, “governing the country according to law” does not mean rule of law as you and I understand it. The essential element required for rule of law — using the law to limit the power of the government — stands in ideological opposition to the purpose of the party. In reality, the rule of law that the party talks about is “Lenin plus Emperor Qin Shi Huang” — modern totalitarianism combined with pre-modern Chinese “legalism.” It is nothing more than a tool to further control society. Rule of law is always superseded by the rule of the party, and there is not a shred of doubt about this.

American politicians, poor dupes that they are, tend to judge the language and actions of Chinese Communist Party leaders as though they were American politicians, too. Nothing could be further from the truth.

I think that one of the reasons I frequently find myself in disagreement with the Washington Post columnist Robert Samuelson is that, although he’s not an economist (he’s a journalist), he shares a handicap that afflicts many economists. He simply does not have a broad enough background of experience against which to test his understanding of events. I believe that’s how he can write, as he does in his most recent column:

The middle class is thinning. Belonging is a matter of self-identity, and fewer Americans buy into its defining presumptions. Whether an improved recovery begins to reverse these attitudes and restore traditional beliefs and confidence is a crucial question for 2015. But repairing the middle class won’t be easy, because it’s a matter of psychology as much as economics.

He hinges much of his argument on the percentage of income tax revenue paid by the highest income earners and his assertion that most policy is intended to help the middle class.

I think that both of those are misreadings. It’s true that the top 10% of income earners pay the lion’s share of personal income taxes (as the lion will do). But personal income taxes as a share of federal revenues have been pretty flat over the years while FICA (payroll taxes) as a proportion of federal revenues has shot up. Since FICA is capped at about $8,000 those in the top 10% of income earners pay a smaller percentage of their income than those below.

And I challenge the claim that policy is intended to help the middle class in anything but a trickle-down sort of way. The federal government giveth and the federal government taketh away. Our trade policy overwhelmingly benefits those at the highest and lowest ends of the income spectrum while the steady erosion of middle income jobs over the last decade or so has been a foreseeable consequence of our trade policy.

I think that the reality is that middle incomes other than middle incomes paid to government workers have been pretty flat.

I think I’d also suggest that middle income people (from the second to ninth deciles) tend to be risk-averse and over the period of the last fifteen years nearly every institution we have has shown itself to be unworthy of trust, from government to companies to churches to the media. It reminds me of a Woody Allen wisecrack:

Question: What’s a three syllable word beginning with “p” that means you think everybody is against you?
Answer: Perceptive

I do not believe that when government is corrupt, overreaching, and spying on you, companies are rapacious, people in the United States are being killed by terrorists, churches are predatory, and the media mendacious it is a psychological problem. Under the circumstances continuing to trust would suggest a psychological problem.

If middle income people are losing the traits of middle income people, it may be because they are starting to live the insecure, low trust lives of the poor.