Mitchell's Musings

  • 03 Nov 2017 4:50 PM | Daniel Mitchell (Administrator)

    Mitchell’s Musings 11-5-2017: Help-Wanted Online


    Daniel J.B. Mitchell


    Every month, I get an email notice from the Conference Board which contains a chart on help-wanted online advertising (HWOL) as a labor-market indicator. As can be seen below on Figure 1, something happens around 2015-2016 that appears to break the series. Up to that point, the index of online help-wanted ads tended to move up and down with employment. For example, the dip of the Great Recession is apparent on Figure 1. And from the depths of the Great Recession, the labor-market recovery appears as the line reverses its decline and moves upward. But after 2015, the number of HWOL ads heads down although employment remained (and remains) on an upward trend.


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    Figure 1


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    In fact, the Conference Board used to publish its HWOL chart with employment also shown as a second line in order to demonstrate the correlation of the two series. However, with the break in the HWOL series after 2015, the Board assumed that something had gone wrong with its methodology and began to omit employment from its chart and to publish the following note with it:


    NOTE: Recently, the HWOL Data Series has experienced a declining trend in the number of online job ads that may not reflect broader trends in the U.S. labor market. Based on changes in how job postings appear online, The Conference Board is reviewing its HWOL methodology to ensure accuracy and alignment with market trends.


    An interesting question is whether – because the HWOL series stopped moving up with the employment numbers – labor-market trends have really ceased to be reflected. A related question is what value the HWOL series is supposed to be adding. Note that if the HWOL series was 100% correlated with employment, you could certainly say it was reflecting “market trends.” But you could also say that collecting the series had little value to analysts since HWOL was not telling you more than you already knew from the pre-existing employment series, at least at a macro level.


    The Conference Board makes available its data for the HWOL series going back to mid-2005. For many years before the HWOL series began, it had published data on newspaper help-wanted advertising. But the value of that information eroded as employers moved much of their advertising for new hires onto the internet. Of course, the internet, the technology for accessing it, and the access of potential workers to it, have all been evolving. Employers presumably are adjusting their use of the internet for help-wanted advertising over time. Some employers still use traditional newspaper ads. And there are other traditional ways of recruiting such as through word-of-mouth with the existing workforce, recruiting agencies, walk-ins, etc.

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    Figure 2


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    Apart from the number of HWOL ads per month, the Conference Board has a data series on how many of the ads each month are new, i.e., not just continuations of ads from prior periods. From those data, you can compute an implicit series on how many ads are being dropped each month. Basically given the number of existing ads in a given month, the number of ads in the next month is the result of adding the new ads to the existing pool and then subtracting those ads that are being dropped from the total. Since we know the number of existing ads each month and we know the number of new ads entering the pool, the dropped ads can easily be calculated.


    It may well be that the absolute number of HWOL ads decreased after 2015 (despite the continuing increase in employment) because employers starting moving their ads to online platforms not captured by the Conference Board. Or perhaps employers began using other methods of recruitment. We don’t know what happened and apparently neither does the Conference Board. But we can look at new HWOL ads as a ratio to existing ads and at (calculated) dropped ads as a ratio to existing ads. That is, we can look at what can be learned from the world of the sources the Conference Board is tracking, even if the Board is missing some alternative online ad sources or is missing a shift to other means of recruiting.


    On Figure 2 above, we show the ratios of new ads to existing ads and of dropped ads to existing ads. Because the two series are noisy, we smooth them with 12-month moving averages. Both ratios suggest that online ads probably don’t stay up online for very long. The two ratios vary between .43 (43%) and .52 (52%). So during the period shown on the chart, typical new ads each month were likely not remaining online for more than two or three months. Put another way, there seems to be a very high churn or turnover in online help-wanted advertising. We don’t know for sure why employers removed the ads that they had previously posted. But surely one reason was that they had quickly found the applicants they needed in response to the ads.


    One might further suspect that during recessions, and in the early recovery period after recessions, there would be many displaced applicants looking for jobs. Thus, posting a job vacancy online would quickly produce sufficient job seekers to satisfy the recruiting employer. As the labor market tightens, however, there would be fewer potential applicants; HWOL ads might then need to stay up longer to attract a sufficient number of possible hires.


    In broad terms, Figure 2 seems to support those suppositions. During the slack period of the labor market, HWOL ads were coming and going faster than they were just before the Great Recession. And now, when other measures of the labor market suggest a return to labor-market tightness and there are anecdotal reports of labor shortages, HWOL ad turnover has again slowed.


    U.S. Bureau of Labor Statistics (BLS) data on the job openings (vacancy) rate show an even tighter labor market now than in the pre-Great Recessions period, as Figure 3 below illustrates. With that market development, we might expect ads to stay up even longer now than in the pre-Great Recession period, and there is some indication of that outcome on Figure 2.


    In short, despite the changing practices in employer hiring and recruitment technology, the Conference Board’s HWOL data series likely is reflecting labor market trends even though it stopped rising with employment. It’s just that the information it is providing is not in the absolute number of HWOL ads, but in the implicit insight into the rate of churning of HWOL ads. It seems to be indicating that in booms ads need to remain online longer from the employer viewpoint than in busts. More generally, the labor-market information contained in the HWOL survey seems to be in the duration of ads rather than their absolute number.


    It would be useful to obtain more information on ad duration such as median and average lifetimes of ads and their general duration distribution. There may be some ads with very brief lives. Others may remain online for long periods, particularly in occupations where turnover is high and there is continual replacement hiring. We get BLS data on the duration of unemployment of job seekers. Ad duration distribution might provide parallel insight into employers’ searches for new workers.

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    Figure 3: Job Openings (Vacancy) Rate for Non-Farm Sector


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  • 27 Oct 2017 11:08 AM | Daniel Mitchell (Administrator)

    Mitchell’s Musings 10-30-2017: Stasis


    Daniel J.B. Mitchell


    I can recall looking at scenes on TV of the Iranian revolution in its initial stages when the American embassy was seized. At the time, I noted what was going on in the background. The focus of the TV narration was on the demonstrators and hostages. But if you looked at background shots of the embassy, traffic was passing in the streets as if everything was normal. People were going to work, school, or wherever. It reminded me of something I had once heard about the Civil War. In the initial days after the south had seceded in 1861, mail service across the north-south border continued for a time. As in Iran, folks were trying to continue doing what they had been doing despite the big events that would eventually have a major effect on their lives.


    At least to this non-expert observer, there seems to be a great deal of contemporary fascination with the idea of “nudge” in academic behavioral science. The nudge idea – really a set of examples with empirical backup – is that you can motivate behavior by seemingly inconsequential environmental adjustments. The standard example in the human resource field is the changing of a workplace choice from opt in to opt out.


    If you have a 401k-type savings plan on offer at a workplace, more people will choose to use it to save if it is said that the plan is available but you can opt out than if it is said the plan is available but you have to opt in. Essentially, since checking a box or not checking a box is a very minor matter, there should be no difference in the behavior of new hires as to whether the plan is opt in or opt out. But empirically, there is a big difference in their behavior.


    Despite the proliferation of examples of this type of seemingly-irrational behavior, the key element may be in avoiding choice, i.e., keeping the status quo. There is apparently inertia in attitudes that leads to the notion that the status quo is best, or at least is best not disturbed. If being in the 401k plan is the default, the fact that people stay in it is really based on a sense that the best choice is to leave things as they are. The same is true if the default is not being in the 401k. Furthermore, I suspect that once someone has made the choice – even if it wasn’t a real, thought-out choice at all – there is going to be a tendency to stick with the decision. After all, if you change the decision after the fact, it means you made a mistake initially. And people don’t like to admit mistakes.


    Now sometimes – if there are really bad consequences to a choice that suggest a change is needed – behavior is altered, both for individuals and groups. Germany and Japan, for example, are now very different countries than they were before World War II. But it took massive destruction to effect that change. Similarly, the economic destruction of the Great Depression put the U.S. on a different political path than existed before the 1930s.


    It seems to this non-expert that the fascination with nudge should be re-focused on the power of stasis, which is really why the default state matters. How do you get people to make different choices (overcome stasis) once they have made a choice and nothing terrible has (yet) happened as a result? (Whether you are in or out of the 401k plan may matter years in the future when you retire, but it has little immediate impact.)


    If you are guessing that I am thinking of the current political scene, you are correct.  Yes, there is a lot of political turmoil in Washington, for those who are paying attention. But there are strong forces of stasis settling in. Despite the White House turmoil, the mail continues to be delivered, airplanes come and go to and from federally-regulated airports, Social Security checks continue to go out, etc.


    On the international front, war with North Korea hasn’t happened, even if experts on talk shows or in op eds say the risk of military conflict has materially increased. On the economic front, unemployment is low and inflation is low. By some measures, even worker pay – often characterized as stagnant – has shown some growth.[3] True, it’s not the kind of real pay gains seen in the 1950s and 60s. But that was then and expectations of what is possible have changed.


    It is true that two of the 52 Republican senators have lately been very critical of President Trump. But they aren’t running for re-election. The other 50 Republican senators can rationalize avoiding joining their dissident colleagues 1) because they might get voted out if they do, and 2) because nothing terrible has (yet) happened. Moreover, some things you probably like as a Republican have happened. For example, public-sector labor unions are about to be weakened by an upcoming Supreme Court decision on union dues and agency fees, thanks to the latest appointment to the Court. There has been some deregulation by executive fiat, etc.


    It’s true that there is the problem of conflict of interest in the president’s business dealings. There seems to be a proliferation of racial friction, thanks to the president’s encouragement of such tensions. Other nations seem to regard the U.S. as unreliable. The president has a tendency to undermine his own cabinet. Despite these unpleasant facts, what you have in the Senate on the part of the GOP is a political variation on the well-known quote of Upton Sinclair:


    It is difficult to get a man to understand something, when his salary depends upon his not understanding it.”[4]


    You can say that in the long run, there will be demographic changes that will benefit those on political left. You even can point to California where the U.S. demographics of the future have already arrived and where, as a result, the Democrats now dominate state politics and the GOP is marginalized. But that demographic long run will arrive for the U.S. as a whole well after the national elections of 2018 or 2020. It’s beyond the horizon of contemporary political calculus. So in the meantime, look for traffic on the street to flow normally (as around the embassy in revolutionary Iran) and the mail to be delivered (as across the north-south border in 1861). For the moment, at least, life for the median voter has not been disturbed. It will take more than a nudge to move us from the contemporary stasis.

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    Footnotes:

    [1] After looking for confirmation of this memory, I found 

    http://historybuff.com/how-was-mail-delivered-during-civil-war-WBlmAPv8q2Yr.

    [2] http://www.latimes.com/opinion/op-ed/la-oe-baker-wages-are-growing-20171026-story.html

    [3] https://www.brainyquote.com/quotes/quotes/u/uptonsincl138285.html.  

  • 21 Oct 2017 10:13 AM | Daniel Mitchell (Administrator)

    Mitchell’s Musings 10-23-2017: Pendulums


    Daniel J.B. Mitchell


    When I was a graduate student at MIT in the mid-1960s, the Cold War was in full swing. There was much interest in the economic growth of the U.S. vs. that of the Soviet Union, i.e., in which system would ultimately produce a higher living standard. That debate may seem odd now, given the (much later) unraveling of the Soviet Union, but it was a lively issue then. Among the topics that came up at the time were the ideas of a Soviet economist, Evsei Liberman, whose reformist ideas had found favor (for awhile) with the powers-that-were. Basically, Liberman called for less emphasis on central control and for a more decentralized, market-type system.[1]


    One of the prominent faculty members at MIT at the time was the Russian-born Evsey Domar who kept up with things Soviet. I recall him saying back then that the Liberman episode was not the first time the debate within the Soviets oscillated between central controls vs. decentralization. You could imagine the arguments: Central control allowed coordination while decentralization allowed local plant managers to take advantage of local knowledge. The pendulum of ideas would swing back and forth between the two positions.


    There are other fields in which the pendulum phenomenon appears. In primary and secondary education, there is the idea that there are basic things that every student should learn vs. the idea that students should have some version of experiential learning which will indirectly teach them the basics but also “soft” skills. The labels on these ideas change, but the pendulum swings between the two views.


    One of the more popular videos on a YouTube channel I maintain is a newsreel from the 1940s on “progressive” education (essentially, the experiential view).[2] By the turn of the 21st century, however, the notion of basics had returned in the form of testing of students. Schools, teachers, and students were to be measured by scores on tests. Now, however, there seems to be a reaction against testing. Complaints are heard that teachers are “teaching to the test” whereas students need to learn those hard-to-measure “soft skills” and that “rote learning” should be avoided.


    It could even be argued that boom-bust cycles in financial markets involve a swinging pendulum. After a crisis, tighter regulations and official controls (and of course fresh memories of the bust) keep a lid on exuberant expectations. But gradually the unpleasant memories fade. There may even be new generations entering the market who were not around at the last bust. The newer financial players find the old regulations and controls restrictive and press for a more “modern” approach. The spirit of “this-time-it’s-different” arises and the boom continues until one sad day it doesn’t.


    I was reminded of the swinging pendulum idea recently by an article in the Los Angeles Business Journal which reported that the generalist MBA was moving out of fashion in favor of management programs that trained in particular functional areas, e.g., accounting, finance, etc.[3] The interesting thing is that when I came to what is now the UCLA Anderson School of Management in 1968, the School primarily offered such programs. There was a generalist MBA offered, too, but students could instead take master’s degrees in the functional areas. The functional area programs shared some generalist core courses (which were also part of the MBA program).


    There were pros and cons about the specialized programs. It was said that faculty naturally preferred to teach in advanced specialized courses of their own field of interest to the neglect of the core, i.e., the generalist MBA program was suffering from neglect. It was said that students needed a more generalized education and could pick up functional skills on the job. On the other hand, students tended to gravitate away from the generalist MBA and toward the specialized degree programs once they entered the School.


    In the end, the arrival of a new dean led to abolition of the specialist programs in favor of the generalist MBA. In part, the argument seemed to be that the Harvard Business School was MBA focused, so UCLA should follow the leader. But now, UCLA seems to be moving toward specialization, at least in some areas.


    Economics has sometimes been criticized for being too focused on final equilibrium solutions and not on dynamic disequilibrium. But the counterargument is that eventually the system being studied will iteratively come to an equilibrium position. Like a pendulum, the swinging length becomes smaller and smaller until the pendulum stops. But some systems are more like pendulum clocks in which forces reinforce the motion and there is no equilibrium, just swinging.


    I suspect that in the cases cited above, because both poles of the argument have merit, there is some tendency for factions to form around the two positions. Soviet-style centralized system DO allow more coordination. But they lose the benefit of micro-level knowledge. Students in primary and secondary education SHOULD learn some basics. But they also need soft skills. Future managers DO need generalist skills valuable in any business setting. But having a specialty can give them entry advantages when being considered for hiring.


    Since there is no obvious right answer – just a trade-off with uncertain parameters - there may be pressure to champion one position or the other. Those folks benefiting from the status quo tend to defend it. Those who are seeking more authority look to the counter-arguments to gain ascendancy. The more things change back and forth, the more they continue to change back and forth. And there never is an equilibrium.


    Footnotes:

    [1] http://www.yivoencyclopedia.org/article.aspx/Liberman_Evsei_Grigorevich

    [2] https://www.youtube.com/watch?v=opXKmwg8VQM

    [3] http://labusinessjournal.com/news/2017/sep/23/business-schools-reframe-degrees/

  • 11 Oct 2017 6:02 PM | Daniel Mitchell (Administrator)

    Mitchell’s Musings 10-16-17: Goodbye Columbus?


    Daniel J.B. Mitchell


    As readers will probably know by now, the Los Angeles City Council and then the Los Angeles County Board of Supervisors voted to change the name of Columbus Day to Indigenous Peoples’ Day. There were protests from Italian-American groups that consider Columbus to be an Italian hero.[1] (The Council set the next day as a holiday – although not one which gave anyone a day off – as a day in honor of Italian-Americans.) And there were op-ed rationales for the change presented, including one by a UC-Riverside faculty member.[2] The rationales offered were good. So was there any reason not to do it?


    There was a special local problem. On the grounds of the downtown “Great Park” in LA, which is surrounded by civic buildings of the City and County, there is a statue of Columbus, as this photo taken by yours truly on Sunday, October 8 shows:

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    But the following day (the former Columbus Day), the statue was found by a local TV station to be surrounded by a chain-link fence and covered with paper:

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    No one in an official position was saying who ordered the fencing and papering or whether it was done to protect the statue from vandalism (as has occurred elsewhere in the country to Columbus statues), or instead to protect the powers-that-be from embarrassment over the inconsistency.[3]


    And lest you think these events have nothing to do with Donald Trump and his controversy over statues, let me quickly disabuse of that notion. There is a connection, whether it was intended or not, between Charlottesville, Civil War statues of confederate “heroes,” and the LA decisions about Columbus.

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    The president had previously defended the “Unite the Right” demonstrators of Charlottesville on the grounds that they were just defending historical monuments and that, if the confederates go, the next would be George Washington and Thomas Jefferson, presumably because they were slave-owners. This charge was derided by historians as implausible because Washington and Jefferson, aside from owning slaves, did important things in founding the nation. Those important things, it was asserted, would override the slave-owning and protect their statues.[4]


    So here’s the problem. Columbus is primarily known in the U.S. as an explorer who, given the primitive navigation technology of the time, performed an amazing feat that ultimately – centuries later – was important in founding the nation. But now his holiday is being renamed – contrary to the Washington/Jefferson argument - and his statue is being papered over (and likely will be removed). So the Columbus issue plays directly into the hands of right and the claim of the president.


    There is one Marist public opinion poll that suggests that there exists general support for the Columbus holiday.[5] Of course, that poll was commissioned by – who else? – the Knights of Columbus.[6] So you can discount the results, if you like. But there is no doubt that changing the holiday, or removing the statue, reinforces a right-wing narrative of an overly-sensitive left and its excessive political correctness. Furthermore, as noted, it makes real the question of whether Washington and Jefferson are next. Is being the commanding general in the Revolutionary War and the first president enough to keep a statue? Is being primary author of the Declaration of Independence and the third president enough?[7]


    The LA decision has certainly sparked a predictable response from right-wing media:

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    In short, while the LA decision has little political consequence in the immediate area, in other parts of the country, there could be consequences. Now you can argue that LA should “do the right thing” and not worry about external fallout. Or you can argue that even considering the negative fallout, the decision to change the name (and probably remove the statue) should be made. But my sense is that the question of any larger external impact or of timing wasn’t even considered.


    Nowadays, many public projects require an Environmental Impact Statement. The idea behind such statements is to include recognition of larger external negative effects that policy makers might otherwise neglect before decisions are made. There are Senate seats up for grabs in 2018. There are House seats in marginal districts, including seats in California, which could go one way or another. It would be nice if sometimes Political Impact Statements were required on public policies to force similar recognition of wider externalities.


    Footnotes:

    [1] http://www.latimes.com/local/lanow/la-me-italians-columbus-la-20171008-story.html.

    [2] http://www.latimes.com/opinion/op-ed/la-oe-hackel-columbus-day-california-settlers-indigeous-peoples-20171009-story.html

    [3] http://losangeles.cbslocal.com/2017/10/09/christopher-columbus-statue-covered-on-first-indigenous-peoples-day/.  

    [4] https://www.washingtonpost.com/news/retropolis/wp/2017/08/16/historians-no-mr-president-washington-and-jefferson-are-not-the-same-as-confederate-generals/

    [5] http://www.kofc.org/un/en/resources/communications/americans-support-columbus-day.pdf.  

    The Knights of Columbus pushed for adoption of Columbus Day as a federal holiday in 1934, although earlier versions existed. https://www.nytimes.com/2017/10/09/us/columbus-day-protest.html.  

    [7] Note that among the “usurpations” of King George listed in the Declaration of Independence is this problematic statement: “He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless Indian Savages, whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions.” https://www.archives.gov/founding-docs/declaration-transcript.

  • 07 Oct 2017 3:44 PM | Daniel Mitchell (Administrator)

    Mitchell’s Musings 10-9-2017: The Meaning of Life


    Daniel J.B. Mitchell


    From time to time, you see stories in the news media and other sources about “life expectancy.” There may be comparisons of the U.S. with other countries or with particular groups within the U.S. There may also be comparisons over time. Table 1 provides an example.


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    Table 1: Selected Life Expectancies at Birth in the U.S. (years)


                         2015        1900

    ------------------------------------------------

    Both Sexes           78.8        47.3  

      Males              76.3        46.3

      Females            81.2        48.3

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                  Males (2015)    Females (2015)

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    Hispanic             79.3        84.3

    White Non-Hispanic   76.3        81.1

    Black                71.8        78.1

    ------------------------------------------------

    Source: https://www.cdc.gov/nchs/data/hus/hus16.pdf#015.

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    You may see things on the table that you already know without seeing the numbers. For example, life expectancy has grown over time or females live longer than males. You may also see things that surprise you, i.e., that Hispanics have a longer life expectancy than non-Hispanic whites. But what precisely do these numbers mean?


    In essence, to calculate these figures, data on survival rates are used. What is the probability within the group that a newborn will reach age 1. What is the probability that a 1-year old will reach age 2, etc., based on current probabilities? So what is really being measured is what would happen - on average - to someone born today if these survival rates were indefinitely frozen.


    Now we know (because of the large increase in life expectancy over time shown on Table 1) that those probabilities in fact have changed over time. Death rates have declined for any age group due to such important factors as the development of public health measures and to advances in medical science and practice. So someone born in 1900 who survived to 1965 and then had, say, a heart attack would likely be taken to a hospital in a fast-moving, motorized ambulance rather than a buggy and would have been treated using 1965 methods rather than 1900 methods.


    In short, if you really wanted to calculate the life expectancy of someone born today, you would need to know what the state of world would be in the future that the newborn will face. There is no guarantee, by the way, that there will be linear progress. For example, when the Soviet Union collapsed, it was noted that life expectancy for men fell, presumably because of disruption of medical services and the social and economic dislocation.[1] More recently, much has been made of increased death rates among U.S. middle-aged whites.[2]


    While life expectancy figures tell you something, the fact that they provide no adjustment for changes in future survival rates is a definite limitation. You can be sure, for example, that the average person born in the U.S. in 1900 turned out to have lived longer than the 47.3 years shown on Table 1. So you don’t want to push such estimates too far. I was therefore struck recently by a headline indicating that figures were being released in Los Angeles County, purporting to show life expectancy by community.[3]


    A press release, for example, tells us that life expectancy in Walnut Grove (population around 16,000) was an astounding 90.5 years, in contrast to a meager 75.8 years in Sun Village (population under 12,000).[4] Both of these places are Census areas, not independent cities. The latter, at least according to Wikipedia, is notable because “composer and musician Frank Zappa played his music and made many friends in Sun Village when he first got started. Thus, Sun Village is the setting of the Frank Zappa song ‘Village of the Sun’ from the 1974 album Roxy and Elsewhere.’”[5] Zappa lived only to age 53, so maybe there truly is a Sun Village jinx. (If only he had made friends in Walnut Grove and instead had composed “Village of the Walnut”…)


    Seriously, to come up with such statistics, you have to assume that someone born in one of these places will not only be subject in the future to the survival probabilities that characterize them today, but will live out their lives entirely in these communities.[6] The probability that someone born in either Walnut Grove or Sun Village will stay there for a lifetime has to be, well, low. And, of course, there is a tremendous noise factor when you try and estimate survival rates in small areas. My city, Santa Monica, has a reported poverty rate of 13.5%, a population of around 93,000, but a life expectancy of 83.2 years. Walnut Grove has a poverty rate of 19%. Is it really less healthy to live in Santa Monica than Walnut Grove?


    I realize that those folks putting out these numbers wanted to call attention to discrepancies in health care and other socio-economic inequities. Obviously, some places are more prosperous than others, and health conditions are going to be correlated with the variation. There is the old line, “I’ve been poor and I’ve been rich; rich is better,” that has been ascribed to many, and is surely true, whoever first said it.[7] But you don’t need silly statistics to prove it to anyone.


    Footnotes:

    [1] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1116380/.  

    [2] https://www.washingtonpost.com/national/health-science/a-group-of-middle-aged-american-whites-is-dying-at-a-startling-rate/2015/11/02/47a63098-8172-11e5-8ba6-cec48b74b2a7_story.html.  

    [3] https://patch.com/california/santamonica/s/g8w8j/la-county-life-expectancy-report-shows-big-gap-between-communities.  

    [4] https://ssrc-static.s3.amazonaws.com/moa/MOA%20LA%20Life%20Expectancy%20Report%20Release_Final.pdf.

    [5] https://en.wikipedia.org/wiki/Sun_Village,_California. Apparently, there were (are?) turkey farms there. You can hear it at: https://www.youtube.com/watch?v=xEZwa1Funh0, or just read the lyrics at: https://genius.com/Frank-zappa-village-of-the-sun-lyrics.   

    [6] From the report: “Life expectancy at birth in a geographic area can be defined as an estimate of the average number of years a newborn baby would live if they experienced the particular area’s age-specific mortality rates for that time period throughout their life.” (Page 16 of the report.) Source: https://ssrc-static.s3.amazonaws.com/moa/LIEXBrief_FINAL.pdf.

    [7] https://quoteinvestigator.com/2017/07/01/poor-rich/.

  • 01 Oct 2017 1:51 PM | Daniel Mitchell (Administrator)

    Mitchell’s Musings 10-2-2017: What You Know


    Daniel J.B. Mitchell


    Sometimes what you assume to be true may not be. Mark Twain is supposed to have said that “It ain't what you don't know that gets you into trouble; it's what you know for sure that just ain't so.”[1] But then again, just to illustrate the point, it appears that he never said it.[2]


    Two items in the news recently come to mind. One is the political appeal of “single-payer” health insurance. There seems to be an assumption, at least on the part of some on the left, that this concept is a natural rallying cry for Democrats. Indeed, it seems on the way to be becoming a litmus test for Democrats. But how popular is the idea generally, i.e., among voters? The other item I spotted in the news – albeit very locally - is that we live in an era of unprecedented technical progress. The little city I inhabit – Santa Monica, California (population around 93,000) - feels a need to plan for this progress.


    Let’s start with the first item. How popular is single-payer, particularly among Democrats, but also among voters in general? Below is a poll from the Public Policy Institute of California (PPIC) that asks those questions. Note that California is a “blue state,” so one might expect the notion to be particularly popular in a California poll.

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    Source: http://www.ppic.org/wp-content/uploads/s_917mbs.pdf

    ===

    It’s true that the poll above doesn’t really ask about “single-payer.” It asks about a “single national health insurance system run by the government.” And it is quite likely that because lots of folks don’t really know what single-payer is, the pollsters had to define it for them to obtain responses. Still, described the way the pollsters asked, only 44% of Californians who identify as Democrats favor the idea. Of course, Republicans don’t like it at all. And independents are in between. So when you add them all together, and adjust for who is likely actually to vote, you get about one-third support.


    That result doesn’t prove that if you had just said “single-payer” with no definition, you might not have gotten a higher level of support, at least among some Democrats (but maybe a lot more “don’t knows.)” But if there were an actual political campaign in favor of a single-payer plan in California, you can be sure that opponents would use language that was intended to evoke a negative reaction. Maybe “government-run” would be emphasized. Or the ending of all private insurance would be featured as a threat, since loss of that option would affect lots of people.[3]


    The poll didn’t test “Medicare for All” as a slogan, which might be considered a subset of “single payer.” But it’s worth pointing out that Medicare is less “single” than you might think, and it doesn’t really eliminate private insurance, as the diagram below illustrates. Most people under Medicare also have some other supplemental plan. And many recipients have Medicare Advantage plans under which a private entity handles medical coverage for a fixed payment from the government.[4]

    ===


    ===

    The bottom line here is that single-payer is unlikely to be a path to sure victory for Democrats. What tends to be popular as a concept is universal coverage – everyone should have health insurance - without a specification as to how that coverage is to be provided. Given the fact that we have had a history of various forms of private health coverage, the notion of re-starting with a new system and scrapping the past seems naïve at best.


    Now let’s turn to the second news item that describes what some people are sure they know. What about the notion that we live in an era of unprecedented technological progress? My own little city, Santa Monica, as noted, recently became concerned about the impact of that progress. It is commissioning a report on how technical change would affect the city and its government over the long term. There is nothing wrong with looking ahead, of course. But the premise seems to be that very rapid progress is inevitable and already occurring:


    Many observers… note that the “pace of technological change is increasing exponentially. Technologies and ways of doing business are rapidly changing and are expected to have significant impacts on how the City provides services and how it pays for those services.[5]


    There is a problem with the idea of the “pace” (presumably rate of change) increasing exponentially, i.e., faster and faster. One relevant measure from the U.S. Bureau of Labor Statistics (BLS) is the change in output per hour. It’s a noisy series, affected by the ups and downs of the business cycle. But when you smooth it out, as in the figure below, it’s hard to see signs of exponential advance.

    ===


    ===

    You do see swings in the BLS series. But in fact in the recent period, the index seems to suggest a recent decline in the rate of advance. Indeed, the current period looks reminiscent of the 1970s and early 1980s when there was a federal Productivity Commission established to analyze what had gone wrong with productivity growth. Of course, you can always say there must be some type of measurement error and point to some new app on your cellphone as surefire evidence of rapid advance. In a more sophisticated response, you might respond that labor productivity is not quite the same as technical progress.


    In fact, the BLS does have a more comprehensive series – so-called multifactor productivity – that is supposed to come closer to measuring technological progress. Unfortunately, although there is a long history of trying to measure multifactor productivity, BLS doesn’t have a really long time series of that concept on a consistent basis. But what there is – shown below – mirrors the story told by output per hour, i.e., recent slippage.

    ===


    ===

    There is no harm in Santa Monica, or any other city or region, engaging in futurology, so long as the cost isn’t too high. But whoever does the study ought to keep in check the tendency to think that right now there is a special leap in progress occurring, unlike what has gone before. It seems that since the Industrial Revolution, people always seem to believe they live with unprecedented progress.


    Perhaps the best place to illustrate that tendency is in popular culture. The new edition of the movie “Blade Runner” is coming out, this time set in 2049. However, the original film was set in Los Angeles in 2019 and was made in 1982, i.e., at the low point of measured productivity shown earlier. Nonetheless, the film postulates that by 2019, there will be flying cars. Bio-tech will have advanced so much that there will be “replicants” and other artificial creatures. Travel to other planets will be routine. It seems unlikely that these prophesies will develop in the next two years. But the filmmakers must have believed they were living in a period of especially rapid progress back in 1982 that would produce such advances in only 37 years.


    In short, the lesson is that Mark Twain was right, even though he didn’t say it.

    ===


    A clouded 1982 view of the future: A Los Angeles of flying cars, heavy Japanese influence, replicants, and Pan Am.

    ===

    Footnotes:

    [1] https://www.brainyquote.com/quotes/quotes/m/marktwain109624.html

    [2] https://newrepublic.com/minutes/126677/it-aint-dont-know-gets-trouble-must-big-short-opens-fake-mark-twain-quote

    [3] There was a single-payer initiative on the California ballot in 1994; it was defeated in a landslide. Of course, that was then and this is now. See https://ballotpedia.org/California_Proposition_186,_Single_Payer_Healthcare_System_(1994).

    [4] Source: http://www.kff.org/medicare/issue-brief/medigap-reform-setting-the-context/. I was unable to find a source with later data of the type shown on the chart. 

    [5] http://santamonicalookout.com/ssm_site/the_lookout/news/News-2017/September-2017/09_28_2017_Santa_Monica_City_Officials_Brace_for_a_Future_of_Hi_Tech_Change.html.  


  • 23 Sep 2017 2:24 PM | Daniel Mitchell (Administrator)

    Mitchell’s Musings 9-25-2017: Retraction is the Wrong Action


    Daniel J.B. Mitchell


    Here’s the beginning of the story, as it appeared in Inside Higher Ed:


    Denounced by some as “clickbait” and others as poor scholarship, a new article on the supposed benefits of Western colonialism has prompted calls for retraction. And while detractors are plentiful and pointed in their criticism, the debate and others like it has some wondering if retraction threatens to replace rebuttal as the standard academic response to unpopular research. “The offending article has brought widespread condemnation from scholars around the globe,” begins a petition submitted Monday to the editor of Third World Quarterly and its publisher, Taylor & Francis, demanding the retraction of “The Case for Colonialism.”[1] The petition says that the paper, written by Bruce Gilley, an associate professor of political science at Portland State University and published earlier this month as a “Viewpoints” essay, “lacks empirical evidence, contains historical inaccuracies and includes spiteful fallacies. There is also an utter lack of rigor or engaging with existing scholarship on the issue.” With more than 10,000 signatures -- many from faculty members -- as of Monday, the petition continues, “We do not call for the curtailing of the writer's freedom of speech … Our goal is to raise academic publishing standards and integrity. We thereby call on the editorial team to retract the article and also to apologize for further brutalizing those who have suffered under colonialism.”[2]


    Then:


    Fifteen members of Third World Quarterly’s editorial board resigned Tuesday over the publication of a controversial article they said had been rejected through peer review. The news comes a day after the journal’s editor in chief issued an apparently contradictory statement saying that the essay had been published only after undergoing double-blind peer review.[3]


    And finally:


    Bruce Gilley, an associate professor of political science at Portland State University, has asked the journal to withdraw the paper. “I regret the pain and anger that it has caused for many people,” Gilley said in a statement Thursday. “I hope that this action will allow a more civil and caring discussion on this important issue to take place.”[4]


    Let’s start with the following two disclaimers. 1) I have no special knowledge of economic development in third world countries. 2) I don’t read the Third World Quarterly and never heard of it before the controversy. So I have no knowledge of the journal’s history, reputation, slant, etc. But I do think there are two elements in the controversy that are relevant to academic journals generally. One is the question of retraction. Another is the role of a journal editor.


    After looking at the article, it appears to me to be an extended opinion piece rather than a research essay. In fact, it appeared as a “Viewpoint” article in the journal. I can imagine a journal retracting a research article which turned out to be based on fake data or which violated some other expectation one might have of a research piece. But it’s harder to justify a demand for retraction of an opinion piece. One member of the editorial board who didn’t resign and who opposed the demand for retraction was Noam Chomsky, someone with whom I would normally not share many opinions. But in this case my sympathies are with what Chomsky said:


    Noam Chomsky, Institute Professor and professor of linguistics emeritus at the Massachusetts Institute of Technology… told Inside Higher Ed that it’s “pretty clear that proper procedures were not followed in publishing the article, but I think retraction is a mistake – and also opens very dangerous doors… Rebuttal offers a great opportunity for education, not only in this case.” Chomsky added, “I’m sure that what I publish offends many people, including editors and funders of journals in which they appear.”[5]


    Despite my admitted lack of expertise in economic development, I couldn’t help but notice that the articled didn’t go into a comparison of China vs. India. The former has been the home of rapid growth, but didn’t retain governance structures of the various European powers (or of Japan) that carved it up into spheres of influence in colonial days. India has been less of an economic success story, despite retaining governance structures inherited from Britain.


    Both countries are huge compared to some of the examples cited in the paper. And, curiously, Gilley has elsewhere written extensively on China.[6] Wouldn’t someone making a case for the benefits of colonial inheritance want at least to deal with the largest examples of third world countries on the planet? In short, I doubt that it would be hard for someone with actual expertise on the subject of post-colonial development – unlike the author of this musing - to develop a rebuttal.


    I have been a journal editor and have been on journal editorial boards, so I do have some experience, if not expertise, in those roles. In this case, the journal’s editor is accused by those members of the board who resigned of misrepresenting the peer review process and of not properly following it. I can’t judge the issue of misrepresentation. But the board’s understanding of the role of a journal editor was certainly not my understanding when I played that role. Even allowing for differences in expectations across fields, I can’t imagine that an editor of any journal is expected simply to follow a mechanical process of review.


    Yes, any respectable journal will have an external review process as its major gateway to publication. But I never thought of my role as editor as being one of just handling the paperwork involved in contacting reviewers and soliciting their opinions. If that were the role, why not hire a clerk to do it? Why would any busy academic want to do it, if that were the role? If I, as editor, thought a submission was worthy despite reservations by reviewers, I would go ahead with it. (There are always reservations by reviewers.) In short, editors – at least in my understanding – exercise judgment. They are expected to exercise judgment.


    In one case, I did resign from an editorial board over an article. But in that instance, a paper that I regarded as little more than an ill-disguised diatribe had been published. When I protested to the journal’s editor, he asserted that he had no choice but to publish it because the outside reviewers had approved. In short, I resigned because the editor had not exercised good judgment, not because he used his judgment. And I certainly did not demand retraction or apology.


    As of this writing, the Third World Quarterly paper is still posted on the web, despite the author’s request for retraction. The journal has not taken it down. And it shouldn’t. As the author’s explanation – reproduced earlier – indicates, his retraction request is based on “pain and anger” caused to readers. The author did not indicate that he now had an epiphany and thought his article’s viewpoint was incorrect. In contrast, Chomsky – in opposing the demand for retraction - notes that his (Chomsky’s) published viewpoint “offends many people.”


    If indeed, as the retraction petition asserts, “there is… an utter lack of rigor or engaging with existing scholarship…,” then surely someone among the 10,000+ petition signatories can easily write a response to the article. Nothing really vanishes from the web, even if the paper is formally taken down. If no one writes a rebuttal, and instead the paper remains quasi-available somewhere in the internet ether, then it will remain the last word on the subject. And if someone does write a rebuttal, but the paper is not readily available, the juxtaposition will suggest that academic bullying – not reasoning – accounts for its absence. If that’s the final result, it would not be a good outcome. A much better outcome would be for the signatories to retract their petition.


    Footnotes:

    [1] https://www.change.org/p/editors-of-the-third-world-quarterly-retract-the-case-for-colonialism and http://fooddeserts.org/images/paper0114.pdf.  

    [2] https://www.insidehighered.com/news/2017/09/19/controversy-over-paper-favor-colonialism-sparks-calls-retraction.  

    [3] https://www.insidehighered.com/news/2017/09/20/much-third-world-quarterlys-editorial-board-resigns-saying-controversial-article.  

    [4] https://www.insidehighered.com/quicktakes/2017/09/22/author-asks-journal-pull-pro-colonial-essay and http://www.web.pdx.edu/~gilleyb/.   

    [5] https://www.insidehighered.com/news/2017/09/20/much-third-world-quarterlys-editorial-board-resigns-saying-controversial-article.    

    [6] https://www.pdx.edu/hatfieldschool/bruce-gilley

  • 15 Sep 2017 9:36 AM | Daniel Mitchell (Administrator)

    Mitchell’s Musings 9-18-2017: Little Things Can Mean a Lot


    Daniel J.B. Mitchell


    Economists have a concept of “externalities” which are generally categorized as causing market imperfections. Externalities can be positive or negative. They typically involve side effects of some activity that do not directly find their way into the costs and benefits of whoever is undertaking that activity. Air pollution is often given as an example of a negative externality. If you run a factory with a smokestack polluting the air, the cost of that pollution is borne by others; it does not enter into the calculation of building or running the factory unless some outside regulator steps in and requires mitigation or taxes the pollution output in some way.[1] As a reverse example, if you improve your house, you may well raise the property values of neighboring houses. But you won’t obtain those external benefits – your neighbors will - and so individual homeowners may underinvest in home improvements.


    The notion of externalities comes to mind at this writing as UC-Berkeley is preparing to host a conservative speaker – Ben Shapiro – at the invitation of a student group, despite perceived threats of violent protests. The new chancellor of Berkeley has decided to do whatever is necessary to have the talk go forward. She is partly doing it to protect notions of free speech and academic freedom on campus. I suspect she is also doing it for a more general reason, a public perception that universities in the U.S. are themselves becoming intolerant – sometimes in the name of tolerance. She is trying to avoid a negative externality that may not affect Berkeley, but does spill over to the larger academic world.


    What’s the evidence of a growing negative public perception? As the survey chart above suggests, the general polarization in national politics – particularly during and after the 2016 presidential election – is showing up in public attitudes toward academia. Democrats tend to have a positive view of academia; Republicans have tended to have a negative view in the past couple of years.[2]


    If you are the head of a university, even in liberal-leaning California where the Republican Party has drifted toward state-level irrelevance, you have to view that trend as a Bad Thing for the larger academic community. But, as noted, the specifics of what happens at Berkeley – particularly in California – largely flow externally. A good deal of the effort at Berkeley with regard to the Shapiro talk has gone into security. A university official put out a news release going into some detail on the steps being taken for security reasons.[3] Unfortunately, included in that release was the following language:


    We are deeply concerned about the impact some speakers may have on individuals’ sense of safety and belonging. No one should be made to feel threatened or harassed simply because of who they are or for what they believe. For that reason, the following support services are being offered and encouraged: (Links to counseling services followed.)


    In short, the wording of the news release inadvertently encouraged the “snowflake” narrative that has widely circulated in conservative media as part of a more general denigration of higher ed. The first item reproduced in the Appendix to this musing comes from the conservative Flashreport website and explicitly uses the snowflake terminology with regard to Berkeley-Shapiro. But note that a similar theme was found in a Yahoo news report which, in turn, picked up a report from mainstream Newsweek.


    Both of these items poke fun at the notion that the mere presence of Shapiro on campus was likely to cause psychological problems for students. It goes along with the trigger warnings, safe spaces, etc., that have been much parodied, particularly on the right. While the author of the news release may not have foreseen that his wording would become a source of mockery, it was a negative externality that should have been avoided. It’s a little thing, a negative externality, which ends up becoming a bigger thing.


    As for Shapiro himself, I will confess to never having heard of him until the controversy over his invitation arose. Although he was invited by campus Republicans, apparently – at least in the past – he has not been a supporter of President Trump. So he might be viewed as controversial within conservative circles. He may be challenged by his immediate hosts at the presentation.

    But I have no idea as to what Shapiro will say at Berkeley. According to the campus newspaper, some faculty are arguing that because he just has opinions they find offensive – or because he might engage in hate speech as they define it - he shouldn’t be allowed to speak. That position is another negative externality for academia. The public may not be friendly toward Nazis marching in Charlottesville, but Shapiro is hardly that.


    The fact that the First Amendment, as interpreted by the Supreme Court (and the Berkeley law school dean), says Shapiro has a right to speak at a public university, is seemingly not persuasive to those folks with such views on the Berkeley faculty.[4] I am going by a description in the campus newspaper, so I may not be doing their viewpoint full justice. But like all negative externalities, the constraining effect on the behavior of those articulating that viewpoint is less than it should be. The cost is borne elsewhere.

    ===

    Postscript: According to the campus newspaper, the Shapiro talk went off without violence. Seven hundred people showed up for the talk. Others engaged in what was reported to be peaceful protest.[5] Police deterred others who might not have been peaceful.

    ===

    Appendix:


    ===


    ===

    Footnotes:

    [1] The assumption is that those individuals adversely affected by the pollution in practice cannot collectively negotiate a deal with the factory owner.

    [2] http://www.pewresearch.org/fact-tank/2017/07/20/republicans-skeptical-of-colleges-impact-on-u-s-but-most-see-benefits-for-workforce-preparation/.  

    [3] http://news.berkeley.edu/campus-update-on-ben-shapiro-event/.

    [4] http://www.dailycal.org/2017/09/08/free-speech/

    [5] http://www.dailycal.org/2017/09/14/hundreds-gather-peacefully-near-uc-berkeley-campus-protesting-ben-shapiros-talk/

  • 07 Sep 2017 3:09 PM | Daniel Mitchell (Administrator)

    Mitchell’s Musings 9-11-17: More Thoughts of the Week


    Daniel J.B. Mitchell


    In a recent musing, I reflected on that week’s prior events.[1] Here is another such weekly reflection.


    The Median Voter


    Recently, California’s Democratic U.S. Senator Dianne Feinstein was booed by members of her own party for essentially saying that she hoped Trump would improve as a president. She has to make a decision soon on whether to run for another term in the U.S. Senate. At age 84, she may very well decide not to run, regardless of boos or praise. However, the folks who booed her seemed to have little sense of what a senator does. Here is one critic:


    “We don’t need to work across the aisle. We don’t need bipartisanship. We don’t need compromise. What we need to do is fight,” said Pat Harris, a Studio City attorney and one of five little-known Democratic challengers who have opened committees to run against her.[2]


    I trust that most LERA readers, with their backgrounds in negotiations and in working things out (if possible), will find such a sentiment anomalous. The problem is that California has all kinds of “interests” in Washington and with the federal government. It gets disaster aid when bad things happen. It gets a lot of Medicaid (Medi-Cal) funding. Etc., etc. (Do I really need to point these facts out?) So, yes, if you want to be a senator, you had better learn to compromise and to deal with folks with whom you disagree. It can’t just be fighting and nothing else.


    “It’s time for Dianne Feinstein to go,” said Ben Becker, co-founder of San Francisco Berniecrats. “She’s not looking out for people of color and poor people, those who don’t have equal footing in Donald Trump’s America. Her argument for civility and bipartisanship will lead us down a very, very dark path with this current administration.”[3]


    There is a major problem with the view above. It’s a simple example of Groupthink. Everyone Mr. Becker knows agrees with him, but he apparently doesn’t know a representative sample of the California electorate. Academic analysts like to look at the numbers, and we had an empirical test quite recently of where the median voter is in California. In the Democratic primary in June 2016, Hillary Clinton got 53.1%. Bernie Sanders got 46%. And, of course, these numbers don’t include Republicans who are roughly one fourth of registered voters, and who didn’t vote in the Democratic primary.[4] So the median California voter is not a “progressive” Berniecrat. In November 2016, for example, California voters rejected ending the death penalty in one ballot initiative. In fact voters supported another initiative that limited death penalty appeals. They liked the death penalty and thought it should be sped up.


    So, yes, California as a state is generally more liberal than the rest of the U.S. But it is not where some folks think it is, politically. What has happened in California is that the Republican Party – as a party - has marginalized itself to the point that at a statewide level (which is what matters for U.S. Senate races), it is no longer competitive. (See the chart below.) And in the legislature, where local districts matter, it has too few seats to matter for most purposes.

    ---


    ---

    But all state primaries (except presidential) in California are non-partisan. Local primaries also are non-partisan. Everyone runs in the same primary regardless of party. Ultimately, candidates have to appeal to a wide audience. None of this proves that Dianne Feinstein should run again. But it does suggest that what California voters want (as opposed to what party “activists” want) is someone who knows the value of civility and compromise – as well as the ability to negotiate with those currently in authority on behalf of the state.


    Madman Theory Once Again


    In my earlier musing on the week’s events, I noted the North Korean nuclear problem and criticized an op ed that suggested that President Trump might be using the “madman” theory of negotiations in dealing with the threat. Under the madman theory, which some commentators have said President Nixon used in Vietnam, you try to convince the other side that you are crazy enough to do terrible things. I pointed out that in any theory of negotiations, credibility has to be an important element. If you want to play the madman game in a negotiation, you at least have to be a credible madman. It’s a simple point, and surely one that LERA members will understand.


    But what the North Koreans (and Chinese) have learned is that the American president is at best a rhetorical madman. He threatens. But he doesn’t do anything tangibly that suggests he will carry through on his threats. Nonexistent armadas are said to be heading toward Korea. Fire and fury are threatened, but no troops are moved. More recently, the president threatened to block all trade with countries that have commerce with North Korea. The problem is that the president doesn’t unilaterally determine U.S. trade policy. And there is no way he is going to block all trade with China or any important country. Moreover, there is no evident strategy. Different officials in the administration say different things.[5]


    The result, as suggested in the earlier musing, is to make things worse, short term and long term. If you convince the other side that in the end you will always acquiesce – despite what you say – it will proceed on its current path. And if at some point, you actually do change your behavior and decide to act for real, the chances of both parties blundering into a conflict have been increased.


    American international diplomacy needs a version of the Hippocratic Oath:

    First, do no harm.


    The President’s DACA Decision


    Let’s go back to that chart on Republican Party membership in California. What caused the slide? The usual explanation is that it was kicked off by Proposition 187 of 1994. At the time, California was in the midst of a multiyear budget crisis that accompanied the end of the Cold War and the (mild) recession of the early 1990s. While the rest of the country quickly recovered, the drop in military expenditures in California had a major negative effect in the state.


    Republican Governor Pete Wilson, elected first in 1990, spent his first term wrestling with a budget crisis caused by the downturn. A budget crisis is not a good platform to run on for re-election. But in 1994, that’s what Wilson had to do. He linked his campaign to Prop 187, which would have denied state services to undocumented immigrants.[6] And he won re-election (against current Governor Jerry Brown’s sister, Kathleen Brown). Prop 187 also passed, although it was largely voided subsequently by litigation.


    The short-run victories of Wilson and Prop 187, however, produced a long-run alienation of the growing Latino population in California from the Republican Party. The Party’s “base” became nativist at a time when Californians more generally went in the opposite direction. Wilson himself would today be considered a “moderate” in the GOP. But he seemed to set in motion a process in which his Party was seen as more and more retrograde, and it has never been able to get off that track.


    Sometimes a momentary success can produce a longer term failure. When you think of President Trump’s recent DACA decision, you might want to think about Wilson and 187.

    ------------------------------


         Great for the “base,” but bad for the Party

    ------------------------------

    Footnotes:

    [1] http://employmentpolicy.org/page-1775968/5035539#sthash.8D6Gw8Lp.dpbs

    [2] http://www.sacbee.com/news/politics-government/capitol-alert/article171652372.html.  

    [3] Ibid.

    [4] Independent voters can vote in Democratic presidential primaries in California, but not in Republican presidential primaries. (The parties make the rules.)

    [5] If anyone is using the madman theory, it is the North Koreans. And, if so, they are much better at it than the U.S.

    [6] https://www.youtube.com/watch?v=o0f1PE8Kzng

  • 31 Aug 2017 5:09 PM | Daniel Mitchell (Administrator)

    Mitchell’s Musings 9-2-2017: Pardon


    Daniel J.B. Mitchell


    Recently, President Trump’s pardon of Arizona Sheriff Joe Arpaio has produced much well-deserved controversy.[1] Although presidents have broad powers to issue pardons, the Arpaio pardon didn’t follow the standard practice of review. Usually, those individuals pardoned have in some way expressed regret for their conduct and have requested a pardon. So the Arpaio pardon was at least unusual. Apparently, Arpaio had not himself requested a pardon, but his lawyer had some communication with the White House about it. And Arpaio certainly did not regret his conduct.


    Of course, there have been other controversial pardons in the past. Perhaps the most notable pardon in that regard was the one granted by President Gerald Ford to former President Richard Nixon. Nixon had not expressed regret at the time and had not requested the pardon. But Ford did not want a former president on trial or even jailed.


    Arpaio’s offense was contempt of court. There was another case, many decades ago, in which a president granted a pardon for contempt of Congress, even though the recipient did not ask for one and, in fact, may well have wanted to go to jail as a martyr. Indeed, what impelled President Franklin D. Roosevelt to issue a pardon to Dr. Francis E. Townsend – even though none was requested – was precisely to prevent Townsend from becoming a martyr and a political issue.

    ---


    ---

    So who was Townsend and why did this issue arise? Townsend (seen in the photo) was an elderly physician who ended up living in, and for a time working for, the City of Long Beach, California, in the 1930s.[2] As the nation sunk into the Great Depression in the early part of that decade, he began promoting a cure for the Depression through a local newspaper. At the time, California was something like Florida today: a place for the elderly to retire in the sunshine, away from colder climates of the Midwest or elsewhere. Long Beach had many elderly residents like Townsend.


    In an era before Social Security, indigent elderly persons relied on support of charities, poorhouses, or – in the case of California – what was termed “outdoor relief,” essentially, an early form of “welfare” for oldsters. Townsend’s scheme, which was concocted out of various movements of the day, proposed a pension payment by the federal government of $200 a month for individuals over age 60, provided they promised not to work and to spend every penny of the pension during the course of the month. Jobs would thus be left to the young and the elderly would stimulate demand and job creation by their consumption. The cost of the plan was to be financed by a seemingly modest 2% tax on all transactions, perhaps jumpstarted by some kind of currency creation.


    There are lots of things to be said about the practicality of the Townsend Plan, but it had an obvious appeal to California’s disproportionately elderly population. Two hundred dollars ($400 for an elderly couple!) was a considerable sum at the prices of that period. Indeed, the Townsend movement felt compelled to publish sample budgets proving that someone could actually spend that amount in a month. The Plan would have transferred as much as a quarter of the GDP from those under 60 to the elderly.


    Townsend’s transaction tax would have applied to any arms-length purchase. Hence, when the carmaker bought steel, it would have been taxed. When the steelmaker bought iron ore, it would have been taxed. When the car was sold to the dealer, it would have been taxed. And when the final consumer bought the car from the dealer, it would have been taxed. Note that this form of pyramid tax would have been a strong incentive for vertical industrial consolidation. If the carmaker owned the dealership, the steel mill, and the iron mine, all but the tax on the final sale could have been avoided. But these details were not of concern to the Townsendites. Soon there were dues-generating Townsend clubs throughout California that spread to the rest of the country. There were Townsend newspapers and books for sale. The Townsend movement, in short, became a profitable business.[3]


    For the Roosevelt administration, the Townsend movement posed two challenges. First, it competed with its Social Security proposal. Compared to Townsend’s $200 a month, the payments to be made under Social Security were skimpy. Moreover, the Roosevelt plan involved creating a pension system that looked like the few corporate pensions that had developed by the 1930s. There would be employer and employee contributions and a trust fund that would have to be built up (and not pay any pensions until the 1940s). Townsend’s plan in contrast had no cost to recipients, did not require a work history of contributions, would start paying immediately, and offered far more money. Thus, Roosevelt and those developing the Social Security plan looked at the Townsend Plan as stealing elderly political support (which it did).


    Second, Roosevelt would be up for re-election in 1936. We know with hindsight that he won in a landslide. But at the time, polling was embryonic and the outcome was not considered a slam dunk. There was fear that Louisiana Senator Huey Long – who had his own “Share the Wealth” movement – would combine with Townsend and other movements that had sprung up. Long might run a third-party campaign that would siphon votes from Roosevelt and throw the election to the Republicans. As it happened, Long was assassinated and the remnants of his movement did combine with Townsend’s and others, running an obscure congressman for president in a campaign that fizzled out.


    The Roosevelt administration found allies in Congress to start an investigation of Townsend. In part, it focused on the moneymaking aspect of the Townsend movement. Townsend himself was charged in the hearings with everything from being an atheist to a communist. There was pressure on the FBI from the Roosevelt administration to dig up dirt on Townsend.[4] The Post Office Department was used to monitor mail volume going to Townsend as a measure of his popularity. In short, although it remains unclear if Townsend was a huckster or just a naïve believer in his plan, he was clearly subject to an array of Dirty Tricks by the administration.


    At one point in the Congressional hearings, Townsend became frustrated with the questioning and simply walked out, an action that led to a contempt of Congress charge for which he was eventually convicted. But in the end, Social Security was enacted in 1935, and Roosevelt was re-elected in 1936. Yet the Townsendites continued to attract significant elderly political support and continued to push for their plan. If Townsend were actually jailed, the president feared, his pension movement would be strengthened. Rather than see that happen, Roosevelt simply issued an unrequested pardon for Townsend, diffusing the issue. Townsend’s followers, unaware of the Dirty Tricks that had been emanating from the White House, in fact looked favorably at Roosevelt’s rescue of their hero.


    The ultimate irony of the Townsend pardon is that it could be argued that Roosevelt owed a debt of gratitude to Dr. Townsend. The administration’s Social Security proposal was a radical innovation in U.S. politics that might well have been defeated in Congress. But with the elderly pushing for the Townsend Plan instead, Social Security became the moderate alternative. A member of Congress or a Senator – having voted against the Townsend Plan – would not want to slap his elderly constituents in the face twice by also voting against the more modest Social Security plan. What Roosevelt considered the crown jewel of the New Deal may well have owed its success to Francis Townsend. You might look at the Townsend pardon as a reward for his inadvertent service to the New Deal.

    ---


    Emblem of the Townsend movement

    ---

    Footnotes:

    [1] https://www.washingtonpost.com/blogs/right-turn/wp/2017/08/30/legal-challenge-to-arpaio-pardon-begins/.  

    [2] The material that follows comes from my book Pensions, Politics, and the Elderly: Historic Social Movements and Their Lessons for Our Aging Society (Armonk, NY: M.E. Sharpe, 2000), Chapter 4.

    [3] A newsreel on the Townsend movement can be seen at https://www.youtube.com/watch?v=B10O4qUR7tY.  

    [4] The FBI did accumulate a large stack of files on Townsend, but never found anything it wanted to pursue. 

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