The Real Problems

James Freeman’s Wall Street Journal column opens with two flat statements, both of which are BS:

The United States faces two significant challenges: too few workers in a private economy with millions of open positions and too many workers in a public sector generating an expected federal deficit this year of $804 billion. If only there were an obvious solution that could somehow address both problems.

There is no labor shortage in the United States. There is a wage shortage. We have far too many low wage jobs and far too many people competing to claim them. Wages in STEM are not rising—something you would expect if there actually were a shortage. If there is any skill mismatch it is in high skills requirements for some blue collar jobs. There is virtually no demand for art history majors, communications majors, or interest studies majors.

And the number of federal employees has been flat for decades as you can see from the graph above. Since the population has tripled over the period depicted, that means that the ratio of federal employees to population has plummeted. There’s an argument to be made that federal employees are too highly compensated (I’ve made it myself) but that’s not the argument that Mr. Freeman is making.

The real problem in government is that non-wage compensation is growing too quickly and it’s pushing up the cost of government. Most of that is health care.

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An Actor’s Life For Me!

I thought that former Cosby actor Geoffrey Owens has been handling his “job-shaming” for working at Trader Joe’s with considerable grace. My hat’s off to him. Couple that this op-ed at the New York Times on the low wages paid to workers at Disneyland and Disney World, and it reveals truths that are well-known to people who are even peripherally related to the entertainment world.

90% of members of Actor’s Equity, the union that represents the “face” performers at Disneyland and Disneyworld or Screen Actors Guild-American Federation of Television and Radio Artists, the union that represents film and television performers, earn less than the median wage from acting. Many hold “day jobs” to make ends meet and those day jobs are their real jobs while their jobs as performers are more like hobbies that make a little money. Yes, top performers make pots of money. They’re the exceptions and their huge earnings distort the averages.

So, good for you, Mr. Owens! There is nothing dishonorable about earning a living through honest work. The shame is on anyone who would think there is.

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Rat Deserts Sinking Ship Emanuel Will Not Seek Re-Election

The big news here in Chicago is that Chicago Mayor Rahm Emanuel will not seek re-election. The Chicago Tribune’s Bill Ruthhart of Clout Street says:

In a stunning decision, Mayor Rahm Emanuel announced Tuesday morning that he will no longer seek a third term in office, signaling the end to what has been a tumultuous – and at times transformative – eight years in office.

With First Lady Amy Rule by his side, an emotional Emanuel said the time simply had come to write a new chapter in their lives together.

“I’ve decided not to seek re-election,” Emanuel said. “This has been the job of a lifetime, but it is not a job for a lifetime.”

Emanuel’s decision marks a dramatic political reversal, as for the better part of the last year he had said he would run for a third term. The mayor, long a prolific fundraiser, had already reeled in more than $10 million toward a bid for a third term.

There are lots of speculations about the nature of the decision and its timing. Here’s mine. I believe that he thinks that J. B. Pritzker will be elected governor in November and it won’t take him long to run the state into a ditch. Running for re-election in the environment that will prevail by then with the city and state in desperate financial condition and political turmoil will not be a success-oriented experience.

In 1969 Laurence J. Peter enunciated a principle, probably the most important revelation about large organizations since Parkinson’s Law. It explains why just about nobody in a large organization is particularly good at his or her job. They have been promoted through jobs they were actually okay at until they reach their level of incompetence and that’s where they remain in the organization. Not everyone reaches her or his level of incompetence. Some retire or go to another organization and the rare few are able to tackle any job that comes their way. That’s maybe one in a million.

Rahm Emanuel has Peter Principled out as mayor of Chicago. He was okay as Deputy Whip although a lousy Congressman. He would have made an excellent head of the DNC since the job requirements are that you can raise money and strategize elections and those are Emanuel’s core competencies.

But not only has he reached his level of incompetence as mayor of Chicago, he’s peculiarly unqualified for the job. He doesn’t have people skills; he doesn’t have a natural constituency; most of the money he raised for his election campaigns was from outside the city; he’s antagonized important people. He doesn’t have charm or charisma; he can’t inspire people; he doesn’t have management skills; he doesn’t have technical skills. Being able to raise money and strategize elections is enough to get elected but not enough to be mayor.

It will be interesting to see what happens now, whether some name politicians will enter the race. I can’t imagine why anyone competent would want to be mayor of Chicago right about now.

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Things To Come

My wife and I went out of town for a family wedding this weekend. Sort of a whirlwind tour—we departed on Sunday morning, went to the wedding, and took a return flight yesterday morning. We stayed here, if you’re interested. Interestingly, the cost was about the same as staying at the nearby Mariott Fairfield. I don’t know about you but all other things being equal I’d rather stay somewhere with a bit of charm than in a place pressed out of a cookie cutter.

I don’t know if I’m just getting old, it was just bad luck, or there’s something in the air. I’m afraid it’s the last. Just about everything was handled incorrectly or incompetently. When we attempt to print out our boarding passes the day before our departure, i.e. as soon as we could, we were shocked to learn that the airline had changed the departure time of our flight from 8:00am to 3:00pm without telling us. They claimed that they had notified us but we had received the notification and rather obviously the notification did not require a response. We scrambled around and were lucky to get a flight to an airport 150 miles from our original destination (75 miles east of where the wedding was to be rather than 75 miles west).

Just about everything else that could have gone wrong did. Meals were incompetently handled. On the return flight we sat on the tarmac for 2 hours waiting to come into the gate (along with 20 other planes), as we were given a series of unlikely excuses for the delay. Just as an example if, as was the case, there are more than a dozen aircraft waiting right along with you and all of the gates you’re taxiing into are visibly empty, there wasn’t a delay at the gate.

But that’s consistent with the systematic incompetence that has surrounded the construction being done on our street. There has been continuous disarray over the period of the last ten months. I can’t tell whether it’s incompetence or “just don’t give a damn”-ation.

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In Re John McCain

De mortuis nil nisi bonum

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Myths and Legends

Believe it or not, I frequently seek out articles, editorials, and op-eds that contradict my working hypotheses in the hope of improving or refuting them. More often than not I am disappointed, generally because so many of these pieces are if anything anti-empirical, relying instead on a combination of political posturing and wishful thinking. I went to the article, “The Myth of a ‘Tight Labor Market'”, at RealClearBooks, assuming that it would challenge my assessment that the U. S. needs a tighter labor market by arguing that tight labor markets don’t have that effect. Instead it provided further confirmation of the conclusions I had already drawn:

Cutting these numbers another way, millennial men’s labor force participation rate is about 15 percentage points lower than that of 45-to-54-year-old men. Many, if not most of America’s 17–20 million male ex-felons don’t work. Despite the political focus on the Trumpian white working class, Millennials, those who have done time, and men higher up the socioeconomic ladder are also among what I call “men out.”

We’re left with the reality that the percentage of men not employed today is about three times what it was during the Truman and Eisenhower eras: well over 20 million men. Not the four million officially deemed to be unemployed.

The possible causes, not fully understood, are many: pain, depression, ill health and opioids; mass incarceration; the internet and online gaming; women’s increasing earning power; government benefits like disability insurance; a sense that women now get many of the better jobs, helicopter parents; or just plain laziness in a culture that has “defined deviancy down,” as the late Sen. Daniel Patrick Moynihan so pithily said.

I think there are other reasons as well. Too many businesses, particularly big ones, are convinced with some reason that labor market will always be loose. If surly, lazy, maleducated, drug-abusing, ill-mannered domestic workers won’t take the jobs on offer at the wages the companies are willing to bestow, polite, grateful workers with advanced degrees from India or China can be brought in instead. That particular strategy won’t last forever. They should look at what’s happening to wages in Mexico, India, China, etc. People don’t leave their home countries casually. As the advantages of moving to the U. S. decline, the pool of workers will to travel will decline, too. Managers should also consider the costs of what is almost literally a Tower of Babel, workers unable to understand each other.

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Pick a Number. Any Number

At Bloomberg Justin Fox complains that GDP just isn’t a very good measure of economic performance:

GDI is gross domestic income, yet another metric of economic activity produced by the GDP estimators at the Bureau of Economic Analysis that’s released with a little more lag time than GDP. That is, the “advance” estimate of second-quarter GDP that was released in late July contained no information on second-quarter GDI. The “second estimate” of GDP that came out Wednesday did.

Now you might think that Jason Furman, a professor at Harvard’s Kennedy School of Government who was the final chairman of President Barack Obama’s Council of Economic Advisers, was just emphasizing this to make the current presidential administration look bad. But that’s really not fair, given that Furman wrote an op-ed in the Wall Street Journal in early July that wielded the GDP-GDI average to argue that the economy had really grown at a 2.8 percent pace in the first quarter, not the 2 percent reflected in GDP growth alone (those numbers have since been revised to 3.1 percent and 2.2 percent).

Also, it’s not just Furman and not just this year. The BEA started reporting the GDI-GDP average in 2015. And in 2013, the Federal Reserve Bank of Philadelphia began publishing its own “alternative measure of real U.S. output growth” called “GDPplus,” which combines GDP and GDI using a statistical smoothing technique known as a Kalman filter. That delivered a 2.1 economic growth rate for the second quarter, down from 3.3 percent in the first quarter.

GDP and GDI are both estimates of the size of the economy, one focused on expenditure and the other on income. They should in theory add up to the same amount, but they apparently never do, even after multiple rounds of revisions. The smallest gap on record is currently $200 million in 2012 dollars, recorded in the first quarter of 1974. In that quarter GDP was bigger than GDI, which it has been about two-thirds of the time since 1947. But during the current economic expansion, GDI has been bigger for 31 out of 36 quarters.

In real fairness I think that Mr. Fox should go back to 2009 and check what he, Dr. Furman, and others were saying then and have said since then. Starting the clock at 2010 or 2012 or 2016 sounds like cherry-picking to me. Even better—go back to 1946.

I have been complaining about the inadequacies of gross domestic product as a meter for measuring the performance of the economy for decades and I don’t think that gross domestic income or their ratio is much better, especially in the near term. Any metric, the entirety of which for a month can be attributed to the sale of stock in a company that represents a tiny sliver of total domestic product, leaves quite a bit to be desired. You would probably do better by going to the center of town and just getting the opinion of the first person you meet. The sooner we abandon the notion that we are capable of fine-tuning the economy the better off we will be.

And as I knew 50 years ago, social scientists’ grasp of statistics just isn’t good enough to do the jobs they’re trying to do. For one thing they suffer from a very bad case of false precision.

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The Caravan Has Moved On

At Areo Helen Pluckrose is complaining that she’s being accused of being right-wing when she thinks she’s actually on the left:

We are now in a situation in which the three parts of the left—radical, liberal and identitarian—are locked in an unproductive deadlock. The radicals oppose the identitarians whom they see as bourgeois elitists rooted in the academy who have completely abandoned the working class and the meaning of leftism. They remain at odds with the liberals for their lack of support for socialism. The liberals oppose the identitarians whom they regard as profoundly illiberal and threatening to undo decades of progress towards individual freedom and equality of opportunity regardless of race, gender and sexuality. They find the radicals of little help in supporting liberalism. The identitarians largely ignore the radicals except in the form of radical feminist rejection of trans identity which they condemn as transmisogynistic hatred but pay some confused lip-service to anti-capitalism (which does not mollify the radicals). They reserve most of their ire for the liberals who are addressing the same social and ethical issues that they are.

Liberal lefties receive most of the identitarian rage because we cannot support the postmodern rejection of an objective truth nor their science-denying cultural constructivism. More than this, however, we cannot support the idea that it is virtuous to see people as members of collectives arranged within a hierarchy that determines who may speak about what in some kind of grotesque recreation of a caste system or medieval feudalism. We cannot accept that the liberalism which has produced so much social progress for previously marginalized groups in society is part of a white, western, patriarchal, cis/heteronormative system of oppression due to its principle that we don’t evaluate people by race, gender or sexuality. We tend to be rather skeptical that we live in a white-supremacist, homophobic patriarchy at all and this is understood (somehow) to be an endorsement of it, although we nearly always accept that racism, sexism and homophobia still exist and have the principles and the will to counter them. For this, we are seen as right wing.

I’m so old I remember when the U. S. senator with the farthest left voting record opposed gay marriage. That was 2008 and the senator was Barack Obama.

Ms. Pluckrose, the caravan has moved on. Everybody hates the center. To those on the right you’re the left and to those on the left you’re the right.

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Trading Places

You know, I’d bet that the people who defended Bill Clinton for lying under oath because it was just about sex didn’t realize that by doing that they were also giving a pass to Donald Trump paying off porn stars and lying about it. Or that they and Republicans would be trading places on this as on so many other policies.

I’d bet that Republicans who castigated Bill Clinton for his extramarital affairs and sexual predations didn’t think they’d be voting for Donald Trump.

So, for example, liberals used to oppose racial discrimination. Now they support it but call it something different. They used to support free speech and criticize loyalty oaths.

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Generational Change

I found this post by policy scholars Trevor Thrall, William Ruger, and Erik Goepner at War on the Rocks very interesting. It seems that Millennials, Americans born after 1981 will eventually come to dominate American politics and they have different foreign policy views than people born before 1946.

Does the rise of the Millennial Generation spell doom for America’s global leadership? To listen to those who support America’s continued deep engagement in the world the possibility is all too real. Recent polling from the Chicago Council on Global Affairs shows 47 percent of Millennials (those born between 1981 and 1996) think the United States should “stay out” of world affairs and only 51 percent think the country should “take an active part” in them. This is compared to well over 70 percent of the Baby Boomers (those born between 1946 and 1964) and the Silent Generation (those born between 1928 and 1945), who favor an active role for the United States.

Today, with the midterms looming as a referendum on President Donald Trump, the nation’s most powerful Baby Boomer, several commentators have noted that Millennial turnout could very well dictate the composition of the next Congress – and their electoral weight will only keep growing. In 2016, Baby Boomers made up 31 percent of voters compared to the Millennials’ 27 percent. But with Boomer numbers declining and Millennials more likely to vote as they age, these young adults could overtake their elders at the ballot box in 2020.

For all the concerns about Millennials, however, the story behind America’s attitude shifts on foreign policy is more mixed than many realize.

Who knew? Is it possible that people who were toddlers in 2001 but are voting age now have different ideas about the foreign challenges that face us? That people who have never known an America that was not at war think differently about war?

If the authors’ characterization of the views of Millennials:

Though there are real signs of global leadership fatigue, younger Americans are not opposed to engagement with the world when it is mutually beneficial. In fact, younger Americans remain quite committed to international life in their own way. However, as our recent study published with the Chicago Council on Global Affairs reveals, the United States is experiencing an intergenerational shift in attitudes about the proper goals and tools of foreign policy. Relative to their elders, younger Americans are much less supportive of the use of military force abroad, but they are equally or more supportive of international trade, cooperation, and diplomacy.

For example, in our study, just 44 percent of Millennials and 54 percent of Generation Xers (those born between 1965 and 1980) believed that maintaining superior military power should be a very important foreign policy goal of the United States, compared to 64 percent of Baby Boomers and 70 percent of the Silent Generation. In that same survey Millennials were also the least supportive of conducting airstrikes against Syria or the Islamic State, as well as coming to the aid of Asian allies like South Korea and Japan.

are true I actually find that encouraging—those are more like my views than the views of most of my contemporaries are.

Let me throw a few spanners into those works. First, although it used to be believed that political views and preferences were determined early in life and unlikely to change that is no longer believed to be the case. The reality is more complicated. It is not true that once a Democrat always a Democrat. There is copious evidence available now that suggests that major life events have a way of influencing your political views. IMO that stands to reason but apparently it comes as a bolt to the blue for many people. A woman for whom at 23 the availability of legal abortion is her most significant political concern may not think the same thing at 60 when she’s more worried about how she will be able to survive when she is too old to work. A man for whom at 20 the draft was his biggest political worry may find that his views evolve when buildings are collapsing around him due to terrorist attack when he’s in his 50s.

Second, the present political and foreign policy leadership in the United States are Silent Generation, people born before 1946. They aren’t Gen Xers or even Baby Boomers. For goodness sake Henry Kissinger is in his 90s and Madeleine Albright is 81 and their views are still influential. Zbigniew Brzezinski was influential right to the time of his death and he was a contemporary of Kissinger’s. In Illinois Mike Madigan is Silent Generation and showing no signs of turning over the reins of power to a younger generation, i.e. Baby Boomers let alone Gen Xers or Millennials.

Bill Gates and Jeff Bezos are Baby Boomers. Sergei Brin, Larry Page, and Elon Musk are Gen Xers. Mark Zuckerberg is a Millennial. Warren Buffett is very early Silent Generation almost Greatest Generation. The youngest Baby Boomers are in their mid-50s.

Over the period of the next 25 years Baby Boomers are likely to become more influential and powerful not less. Barring some technological breakthrough it is highly unlikely that I will live to see a time when Millennials dominate politics and foreign policy and if there is such a technological breakthrough it is less likely rather than more that Millennials will find themselves in positions of power.

We will have the Baby Boomers to kick around for the foreseeable future.

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