Monthly Archives: May 2014

Immigration and Skills

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Reihan Salam writes,

While only 6 percent of working-age native-born Americans do not have a high school diploma, the share of working-age immigrants without a high school diploma is over 25 percent. And though immigrants represent 16 percent of the U.S. workforce, they represent 44 percent of workers without a high school diploma.

Salam clearly sees it as a mistake that the U.S. encourages more low-skill immigration than high-skill immigration. However, this is not as obviously correct as it appears. One interesting question is how much the U.S. raises the productivity of low-skilled workers when they cross the border. If the answer is “a lot,” then the case for restricting low-skilled immigration is not particularly strong.

From the conservative point of view, the dire scenario is one in which low-skilled immigrants and their families ultimately consume more in government services than they produce. The libertarian answer would be “more immigration, less social welfare spending,” neither of which seem like popular policy positions at the moment.

The Passivity of the Progressive College Administrator

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In a long article about controversies about rape at Swarthmore College, Simon van Zuylen-Wood writes,

The second central remnant of the school’s Quaker legacy — the “peaceful resolution of conflicts” — resides not in the student body, but in the administration. “From the very smallest scale to the largest scale, the college does have a long history of finding a way through that won’t leave half the people in any room feeling like they lost,” says Swarthmore history professor Tim Burke. “It means, for one, we tend to defer difficult decisions.”

My remarks.

1. I do not think that the Quaker tradition has anything to do with it. The passivity of college administrators is everywhere. They are passive when it comes to alcohol abuse. (I wish I had saved the email sent to parents by the President of Muhlenberg several years ago, with its helpless hand-wringing over the fact that more than a dozen students had been hospitalized with alcohol poisoning during the first semester. I wrote back saying that I could make a few suggestions to the admission office that would probably suffice to solve the problem.) They are passive when it comes to students exercising a heckler’s veto of speakers. They are passive when it comes to anti-semitism.

2. The article made me wonder how there came to be an overlap between “casual sex about which I felt ambivalent” and “rape.” It seems to me that one ought to be able to draw a reasonably clear line between the two.

3. Colleges seem to want to be separate jurisdictions in which ordinary laws do not apply. They do not want their students to be arrested and prosecuted for vandalism, violations of drug laws, or rape. Instead, they prefer their own judicial processes.

4. How does this issue play out along the three axes? Suppose that along the oppressor-oppressed axis you think women are oppressed with regard to sex. In that case, it might seem reasonable to believe that women are entitled to casual sex and also to later claim that casual sex about which they felt ambivalent was rape. Along the freedom vs. coercion axis, I think you would support colleges that want to apply their own laws and judicial processes, and let students and parents choose colleges knowing what the rules are.

But it turns out that my views on the issue are more along the civilization vs. barbarism axis.

–I think that what is missing from college is the concept of punishment. I think you have to decide whether students are adults or children, and punish accordingly. If you treat students as adults, then you put them through the legal system. If you treat them as children, then you limit their privileges.

–If students are exempt from adult law enforcement, then colleges should reinstate what used to be called “parietal rules.” No sex, no drinking, no drugs. On the other hand, if students are adults, then they ought to face adult consequences.

–If I were a school administrator, I would put students into the “adult” category, and I would tell students and parents to expect that treatment. I would only have a campus judicial process for academic issues, not for issues involving alcohol or sex. That means allowing local police to patrol campus and enforce laws. If drunk students are arrested for disorderly conduct and vandalism, so be it. If students face the same risk of drug prosecution that someone faces off campus, so be it. If they can be charged with rape and convicted in court, so be it. I certainly would not discourage victims from pressing charges. On that note, Heather MacDonald writes,

But the main reason “survivors” don’t demand to bring their cases to criminal court is that they know that what they have experienced is something far more complex and compromised than criminal sexual assault, almost invariably involving mixed signals, ambiguity, and a large degree of voluntary behavior on their part.

That is certainly the impression that I took away from the Swarthmore article. If I were an administrator, I would not try to set up the college as the official arbiter of such cases.

–When a sexual advance becomes too persistent or aggressive, I would encourage the victim to be very assertive, to the point of screaming “rape” rather than giving in. You are entitled to your body and your personal space, and that deserves priority over protecting the other person’s feelings.

–Colleges go out of their way to make condoms available (e.g., resident assistants must keep them in a candy jar for students to be able to access) and to ensure that students know how to use them. I would say do the same thing with rape whistles.

UPDATE: Megan McArdle has similar thoughts:

If students are adults, and the college is not supposed to be in charge of their sex lives, then the correct place to adjudicate sexual crimes is in the courts, not the campus judiciary system.

Should Private School Parents Get a Tax Break?

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Andrew Samwick says yes. He argues that by reducing the cost of public schools,

sending children to private schools generates what economists call a “positive externality.”

His proposal:

…allow a federal (and possibly state) tax deduction for parents who send their children to private schools, in the amount of the per pupil expenditure in their local public schools.

I can imagine a few objections from supporters of public schools. They might argue that taking your child out of public school creates a negative externality, because public schools are presumed to be better for society. Also, they might argue that because a lot of the cost of public schools is fixed cost rather than variable cost, the average per pupil expenditure overstates the marginal savings from having one less student in the public school system.

Wading into Probability and Race

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I am still only partly through Nicholas Wade’s A Troubled Inheritance, and I am dealing with what I think is a Bayes’ Theorem issue.

For Wade, a race (as in European or African) is a cluster of genes that go together in a sense that is probabilistic rather than absolute. You can identify a person’s race with high probability, based on DNA analysis. Apparently, the cluster of genes involved is large–over 100 different alleles. (I may not have this right. I never took a bio course.)

Suppose that there are 100 alleles of interest, each of which can be “heads” or “tails” (did I mention that I never took bio?). In Europeans, each one has a 55 percent chance of being heads. In Africans, each one has a 50 percent chance of being heads. If you observe a person in which only 40 of the alleles are heads, you can be very confident that this person is an African. There will be 14 times as many Africans as Europeans with 40 or fewer “heads.”

But once you have confidently identified an African, and you want to predict whether the African has heads or tails on a particularly allele, it is still a 50-50 guess. Or, I suppose you could say that in this particular instance, knowing that 40 of the alleles are heads, it is a 40-60 guess.

My point is that you can have a very high probability that someone is an African, conditional on a bunch of genetic characteristics. But at the same time, you can have a not-so-high probability that someone has a particular genetic characteristic, given that someone is an African. (For some characteristics, notably dark skin color, the probability that the African has that characteristic is very high. But the same need not be true for other characteristics.)

The really loaded issues in race have to do with the probability of having a characteristic given that you belong to a race. So far, Wade has not told me anything that indicates that we know much about this. Instead, he tells me we know a sort of reciprocal probability, which is the probability of belonging to a race given that you have a particular set of genetic characteristics. If you know Bayes’ theorem, you know that the one conditional probability need not be close to its reciprocal. I think that the hypothetical result given above makes one wary that there is a Bayesian sort of problem lurking in this book. Bear in mind that I am only part of the way through.

UPDATE: Wade apparently is out as NYT science writer. The reasons have not been disclosed, but I doubt that Bayes’ Theorem was a factor.

UPDATE 2: Commenters point out that Wade has been a former science editor at the NYT for quite some time, so perhaps the story of him being out is a misinterpretation.

The Tribalism Hormone

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I am still not very far into Nicholas Wade’s Troubled Inheritance, but I found out something I did not know but which fits well with my world view. It turns out that oxytocin is not some generic “trust hormone” that makes one feel at ease with all sorts of strangers. Instead, describing the implications of recent research by Carsten de Dreu, Wade writes,

Oxytocin engenders trust toward members of the in-group, together with feelings of defensiveness toward outsiders.

Wet Nanotechnology

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An interesting article.

The promise is a highly targeted method of drug delivery, precision guided missiles that leave healthy cells alone — as opposed to the kill-everything-cluster-bombs of chemotherapy.

And here’s the interesting part: Douglas and his peers have actually produced the nanorobots and they appear to work. At least in cell culture flasks.

How they did it says a lot about where we are and where we’re going in synthetic biology, an emerging field that allows scientists to custom design DNA, proteins and organisms to carry out specific tasks.

Pointer from Tyler Cowen. Successful anotechnology requires the ability to control the end product and self-assembly. Dry nanotechnology, which uses materials science rather than DNA, makes the control problem relatively easy and the self-assembly problem relatively difficult. Wet nanotechnology does the reverse. My uninformed inclination is to assume that wet nanotechnology will arrive sooner, because I think it will be easier to start with a working solution to self-assembly and achieve control than the other way around.

Was Galbraith Right After All?

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Ian Hathaway and Robert E. Litan write,

the firm entry rate—or firms less than one year old as a share of all firms—fell by nearly half in the thirty-plus years between 1978 and 2011. The precipitous drop since 2006 is both noteworthy and disturbing. For context, the rate of firm failures held relatively steady—aside from the uptick during the Great Recession. In other words, the level of business deaths kept growing along with the overall level of businesses in the economy, but the level of business births did not—it held relatively steady before dropping significantly in the recent downturn. In fact, business deaths now exceed business births for the first time in the thirty-plus-year history of our data.

…—whatever the reason, older and larger businesses are doing better relative to younger and smaller ones. Firms and individuals appear to be more risk averse too—businesses are hanging on to cash, fewer people are launching firms, and workers are less likely to switch jobs or move.

Some possibilities:

1. Galbraith was right. Large, established firms have the advantage, due to advertising and technocratic management. Consider what Wal-mart has done to the small-town pharmacy or grocer. There is dynamism in the market, but it is not coming from the mom-and-pops.

2. Population aging. Older workers are less mobile, and older consumers are less willing to change.

3. Consider the sectors in the economy that have expanded: health care, where there is consolidation (fewer small practices, lots of mergers); finance, where our system has become much more concentrated; education, where new entry faces regulatory barriers. As the share in the economy of more-dynamic sectors (manufacturing, retail) shrinks, and the share of less-dynamic sectors rises, the average dynamism falls.

4. Perhaps incumbent firms have become better at using regulation to deter entry. I think of automobiles, where I am guessing it takes more lawyers than engineers to bring a new car into the market.

A Smithian Theory of Inequality

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It seems that Piketty offers one stylized fact about inequality, which is that it rose during the long 19th century, fell during the period of the World Wars and their aftermath, and has risen since. What might explain this?

I would offer a theory in the spirit of Adam Smith: the division of labor is limited by the extent of the market.

My theory is that the more division of labor, the greater the inequality within a nation. Of course, from a world perspective, inequality may go up or down, and in recent decades it has gone way down.

The long 19th century was an era of globalization. World War I interrupted that, and there was little recovery of international trade between the wars. After World War II, trade also was limited. We had the cold war, which isolated the East from the West. We had economic policies in many countries that were anti-trade (remember import substitution?). Finally, in the 1980s, we began to see liberalization in the West, and then greater liberalization in China, India, and some of the former Soviet bloc. Then we had the Internet, which opened up new opportunities for specialization and trade.

This unleashed a new round of globalization, and the “extent of the market” became greater. The business opportunities this created helped to increase inequality within nations. At the same time, incomes increased in India, China, and several other poor countries, so that world inequality fell.

This theory won’t give me a best-selling book. But I think it has merit.

No One Standard of Living

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John Cochrane writes,

The deeper point is that things are getting cheaper and cheaper, and people — services provided with their expertise — are getting more and more expensive.

He points to an NYT chart showing plummeting prices for goods and soaring prices for education, health care, and child care.

My view is that a lot of spending on these services is discretionary (not all of it, of course). I think this makes any broad statement about “the” real wage incorrect. See my essay on that topic.

SNEP: Fade-out Benefits First, Consolidate Later?

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A few days ago, I proposed an idea to replace means-tested programs with flexible benefits. Part of the idea was to get rid of the various income thresholds and instead start with a fixed sum of flexdollars that “fades out” at a rate of 20 percent for each dollar that a household earns.

It occurs to me that this can be thought of as two separate proposals.

1. Replace all earnings thresholds in means-tested programs with a fade-out.

2. Consolidate means-tested programs into flexdollars.

Since my main concern is to lower implicit marginal tax rates on low-income households, maybe the simplest thing to do is to focus on doing (1) first, and leave (2) for later. Thus, for each means-tested program, replace all earnings tests with a fade-out rate of 20 percent, meaning that you lose 20 cents in food stamps for every dollar of income. So if a family of four with zero income gets $8000 per year in food stamps, a family with $20,000 in income would get $4000, and a family with $40,000 in income would get no food stamps.

In fact, food stamps work sort of like this. See A Quick Guide to SNAP. But the rules are more complex. And then you have Medicaid, welfare, housing subsidies, and Obamacare subsidies, all with different approaches to means testing. I think it would be pretty straightforward to introduce a “flat tax” of 20 percent for all of these means-tested programs. With Medicaid, perhaps the fade-out could be applied to the Federal subsidy given to states, and then it would be up to states to pass this through to individuals.

Comments welcome.