Relevant and even prescient commentary on news, politics and the economy.

Islamic Extremist Violence v. Right Wing Extremist Violence, and Our Government

Earlier this month, the Government Accounting Office released a report entitled Countering Violent Extremism”. Its a great example of how to outright lie using data. (I note that the, um, “analysis” was performed between October 2015 and April 2017, and bears the previous administration’s imprint. The current administration’s inanities lie in an orthogonal direction.)

The upshot of the report is:

GAO recommends that DHS and DOJ direct the CVE Task Force to (1) develop a cohesive strategy with measurable outcomes and (2) establish a process to assess the overall progress of CVE efforts. DHS and DOJ concurred with both recommendations and DHS described the CVE Task Force’s planned actions for implementation.

All well and good, once you get through the acronymese. But you cannot tackle something you don’t understand, or pretend not to understand. (Sun Tzu’s dictum about the need to know the enemy and know oneself comes to mind.) And this is how the authors of the piece understand violent extremists:

Of the 85 violent extremist incidents that resulted in death since September 12, 2001, far right wing violent extremist groups were responsible for 62 (73 percent) while radical Islamist violent extremists were responsible for 23 (27 percent). The total number of fatalities is about the same for far right wing violent extremists and radical Islamist violent extremists over the approximately 15-year period (106 and 119, respectively). However, 41 percent of the deaths attributable to radical Islamist violent extremists occurred in a single event—an attack at an Orlando, Florida night club in 2016 (see fig. 2). Details on the locations and dates of the attacks can be found in appendix II.

The usual narrative we’ve seen in the past decade and change in this country is that right wing extremists are more dangerous than Islamic extremists. But bad as the right wing crazies are, the narrative is getting a bit hard to sustain, what with the internet being so easily accessible. So the rear-guard action now seems to be to say that radical extremists at least aren’t any worst than the people we actually are allowed to think of as villains, and maybe better if you ignore that Mateen fellow.

But going to appendix II, where the data, such as it is, sits, is eye opening. Appendix II is basically a collection of sordid acts, described in short blurbs. Some are well-known, such as the aforementioned Mateen case: “Orlando Night Club shooting. Omar Mateen killed 49.” Some are oddly described. The John Allen Muhammad – Lee Boyd Malvo sniper attacks are broken up into 15 separate incidents, each with one dead victim. (This seems shy of the 17 deaths attributed to them in other sources, but that’s a quibble.)

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National Personalities & Genetic Traits at the BBC… Plus Something More on the BBC

So the notoriously alt-right fringe fake news organization, the BBC, had an article entitled Different Nationalities Really Have Different Personalities. It begins:

When psychologists have given the same personality test to hundreds or thousands of people from different nations, they have indeed found that the average scores tend to come out differently across cultures. In other words, the average personality in one country often really is different from the average personality in another.

From my perspective, as someone who spent around 30% of his life abroad, if the paragraph above wasn’t true, there’d be little point in traveling. Why the heck go through the hassle and expense of getting yourself to Malaysia, Mexico or Morocco if you’re just going to meet the same people you’ll find on your block?

Now, the Beeb does assure us that many of the perceptions that people do hold about the personalities of different countries are wrong. But that isn’t as comforting as you might think. To make that statement, of course, requires knowing what the personalities of the countries are, which is covered here:

Several large international studies have now documented cross-cultural differences in average personality. One of the most extensive was published in 2005 by Robert McCrae and 79 collaborators around the world, who profiled more than 12,000 college students from 51 cultures. Based on averaging these personality profiles, the researchers were able to present an “aggregate” trait score for each of the cultures.

The highest scoring cultural groups for Extraversion on average were Brazilians, French Swiss and the Maltese, while the lowest scoring were Nigerians, Moroccans and Indonesians. The highest scoring for Openness to Experience were German-speaking Swiss, Danes and Germans, while the lowest scoring on average were Hong Kong Chinese, Northern Irish and Kuwaitis. The study also uncovered variation between countries in the three other main personality traits of Neuroticism, Conscientiousness and Agreeableness.

Of course, it’s important to remember that these are averages and there is a lot of overlap between countries; there are undoubtedly a lot of people in Indonesia who are more extraverted than some from Brazil.

Of course, that result is so 2005. More recent polling seems to indicate that post-experience Danes are less open to more experience in the future, at least when that experience involves immigration from some regions of the world.

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The Murder Rate – A Regression with Many Variables

In this post, I want to look at the murder rate, by state. I ran a regression with the state murder rate for 2015 as the dependent variable, and literally threw the kitchen sink at it: demographics, weaponry, income, education, population density, etc. Basically, if its something some reasonable percentage of the population believes matters, and I could find data for it, I threw it into the hopper.

I also included variables relating to immigration status. The latter stems from some from some debate in the comments section to other posts in which I stated my belief that illegal immigrants drive up the crime rate. Several detractors insisted that illegal immigrants have lower, not higher crime rates than the rest of the population, and that I am racist to boot. Before presenting results, I will note – I am not too proud to admit the regression results did not fit with my preconceptions. I am also not too proud to admit the regression results did not fit with the preconceptions of my detractors. Finally, while I am always interested in whatever the data has to say, I suspect my detractors will really, really not the results.

So… without further ado, the output from R:

r output 20170402a

What does this all mean? Simply put, only two variables are statistically significant at the 5% (or even 10%) level: percent of the population made up of non-Hispanic Whites, and population density. The greater the share of the population made up of non-Hispanic Whites, the lower the murder rate. On the other hand, the greater the population density, the higher the murder rate. To those who don’t use statistics very often, remember – this is taking into account all other variables.

Now, there are a few variables that come close to being statistically significant at the 10% level. In other words, it is possible (not necessarily likely, just possible) that under other circumstances – with a better defined model, or more precise variables – these variables would prove to be statistically significant as well. These variables are:

1. Percent of the population made up foreign citizens here legally. That variable would have a negative effect on the murder rate if it were statistically significant.
2. Percent of the population that is Asian. This variable also would have a negative effect on the murder rate if it were statistically significant.
3. Percent of the population age 18 to 64. Obviously, most of the murders are committed by people within a subset of this range – probably around 18 to 30. If I had the data to separate out this cohort, I believe we would find that the more people in this cohort, the greater the murder rate.

So… what doesn’t matter? First, the percentage of the population made up of illegal immigrants. Ditto the percentage of the population made up of naturalized citizens. These did not increase the murder rate nor lower it. If the murder rate parallels the crime rate in general, then the media narrative that illegal immigrants have lower crime rates than the population as a whole is not supported and to some extent contradicted by the data.

Second, race & ethnicity don’t matter, at least once you pull out non-Hispanic Whites and maybe Asians. Holding all other variables (including education and income) constant, it doesn’t appear that the murder rate differs in a statistically significant way from one non-Hispanic White or Asian racial/ethnic group to another.

Median income doesn’t matter. Neither does the percentage of the population with an income under 20K. Or the percentage of the population with an income over 100K. Or education level. The murder rate is not affected by these variables.

Another thing that doesn’t matter is the degree to which the population happens to be armed. And Lord knows, there are all sorts of variables here. These include “destructive devices” (think grenades, rockets, missiles, mines, poison gas, explosives, or incendiary devices – apparently all these and more are registered by the ATF), machine guns, silencers, short barreled rifles, short barreled shotguns, or other. The innocuous sounding other group includes your garden variety revolvers and pistols.

So essentially, in summary – accounting for education, income, nativity. immigration status, the regression suggests that having more non-Hispanic Whites decreases the murder rate, and having a greater population density increases the murder rate. No other variables in this regression are statistically significant.

Anyway, I can babble on about the results. For example, it would be interesting to see immigrants (both legal and illegal) broken up with enough granularity to see if the results of non-Hispanic Whites and Asians apply to immigrants as well.

But enough of my prattling. What are your thoughts?

As always, if you want my spreadsheet, drop me a line. If you contact me within a month of the publication of this post, I will send it to you and possibly make some sort of witty remark. Since I am adorable, I probably will send you my spreadsheet after that date as well, but I reserve the right to have a file crash, lose my computer, acquire dementia, or die if too much has elapsed. My contact info is my first name (mike) and a dot, then my last name (kimel – only one m there) at gmail dot com.

Links and details to the data are in my spreadsheet.  But if you want to replicate it yourself (it was a pain in the butt, but who am I to stop you?) the data are listed below. Where possible (which was the case for only a few exceptions, as noted below), I tried to use 2015 data to match the murder rate.

2014 data on firearms came from Exhibit 8 from this document produced by the Bureau of Alcohol, Tobacco and Firearms.

Population from the Census. 2015 data was used for most purposes. 2014 data was used for firearms per capita data.

Population density from 2010 was obtained from the Census.

2015 median hh income came from the Census.

A number of other variables came from the Census CPS Table Creator. This was used for data on race, income, native v. naturalized citizens v. foreigner, educational attainment, age, and gender.

Pew estimates on illegal immigrants, including Mexican v. non-Mexican, were available for 2014.

Finally, the number of 2015 murders originated with the FBI, but was present in this handy dandy file compiled by the Murder Accountability Project.

 

Update…  April 2, 2017  4:01 PM

I forgot to mention a couple corrections to the data:

1. The Pew data on % of illegal aliens that come from Mexico included a few NAs, in each case for states with a very low percentage of the population being made up of illegal immigrants.  In those instances, I assigned the national average share (i.e., 52% of the unauthorized aliens are from Mexico).

2.  The CPS table information on race and ethnicity had a few examples where no information was given for a given combination of race & ethnicity.  In each case, it was possible to determine that the number was very small because the sum total of the other race & ethnicity combinations came close to 100%.  In those instances, I simply replaced the NA with a zero.

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How Much Crime Do Illegal Immigrants Commit?

You probably never heard of SCAAP, the State Criminal Alien Assistance Program.  But I expect it will be showing up in the news a lot pretty soon.

This is what it does:

The Bureau of Justice Assistance (BJA), Office of Justice Programs, U.S. Department of Justice, administers SCAAP, in conjunction with the U.S. Department of Homeland Security (DHS). SCAAP provides federal payments to states and localities that incurred correctional officer salary costs for incarcerating undocumented criminal aliens who have at least one felony or two misdemeanor convictions for violations of state or local law, and who are incarcerated for at least 4 consecutive days during the reporting period.

Translation: state and local jurisdictions are compensated by the Federal Government for expenses incurred for holding criminal aliens. Why do the Feds pay? To quote from a letter signed by California’s Congressional delegation to key members of the House Appropriations Committee a few years ago:

As you know, SCAAP is a grant program that reimburses states and local governments for the cost of incarcerating undocumented immigrants convicted of crimes. By law, the federal government is ultimately responsible for immigration enforcement, including the incarceration of undocumented criminal offenders. When this is not possible, the law requires the federal government to compensate state and local governments for their incarceration costs.

So… the Federal Government is responsible for immigration enforcement, which is to say (in this context), preventing illegal immigration. Therefore, if a non-immigration related crime is committed by someone the Feds failed to keep out of the country, the Feds compensates state and local law enforcement.

The number of prisoners for which the SCAAP program provides compensation are hard to find. It is almost as if those figures are kept deliberately opaque. However, according to the General Accounting Office:

The number of criminal aliens in federal prisons in fiscal year 2010 was about 55,000, and the number of SCAAP criminal alien incarcerations in state prison systems and local jails was about 296,000 in fiscal year 2009 (the most recent data available), and the majority were from Mexico.

The same GAO document tells us that there were about 10.8 million aliens with undocumented status in the US in 2009. 296,000 is 2.74% of 10.8 million, so about 2.74% of the aliens with undocumented status were incarcerated in the state prison system and local jails that year.

How does that compare to the population at large? According to Appendix Table 2 of this Bureau of Justice Statistics report, in 2009, the state prison population was 1,319,426 and the local jail population was 767,620 for a total of 2,087,046.

The US non-institutional population at the time was about 301,500,000, so add in the 2 million for state and local prisoners, and add in about 205K Federal prisoners, and you have a US population of about 303,705,000.

2 million and change divided by 303.7 million comes to less than 7 tenths of a percent of the US population ending up in state and local prisons. That is well under the 2.7% for the undocumented aliens. Or…illegal immigrants are around four times more likely to be imprisoned in a state or local jurisdiction than the population as a whole. (Note that this ratio is probably even more lopsided since SCAAP only applies to aliens with at least four consecutive days of time served.)

Now, illegal immigrants having 4x everyone else’s crime rate is a far cry from the often repeated claim that “illegal immigrants are less likely to commit crimes than the native born.” Thoroughly contradicting popular wisdom makes for an extraordinary claim, and extraordinary claims require extraordinary proof. So let’s see if we can find some additional support for the claim.

As luck would have, it isn’t just state and local jurisdictions that imprison people. The Federal government does it too. The 2015 US Sentencing Commission Report states that:

A majority of federal offenders are United States citizens (58.5%). Most non-citizen offenders committed an immigration offense (66.0%).

So let’s assume that those who committed an immigration offense are innocent of any other offense, and disregard them completely.

Endnote 13 of the same document tells us:

Non-citizens primarily are convicted of immigration crimes. Non-citizens were the offenders in only 14.1 percent of all other federal crimes in fiscal year 2015.

According to Pew Research undocumented aliens accounted for about 3.5% of the total population in 2015.

So 3.5% of the population represents 14.1% of Federal prisoners incarcerated for non-immigration related crimes. That is to say, illegal immigrants were four times as likely to be in a Federal prison for a non-immigration related crime as the rest of the population in 2015, which is about the same proportion we see in state and local jurisdictions in 2009. Coincidence?

You don’t have to like something for it to be true. But the relative crime rates of the illegal population are what they are. Now perhaps you don’t think crime rates matter to the illegal immigration debate. Fine. That’s a topic for another day.

What I think is more topical, though, is that sooner or later the Trump administration is going to figure out that SCAAP exists, that it is part of the Federal Budget, and that it can be used as a cudgel against the sanctuary movement. And frankly, stopped clocks being right twice a day and all, they will have a point when they do so.

Demanding compensation from the Feds’ for their failure to enforce a law while simultaneously preventing the Feds from doing so seems very squirrelly. I am no attorney, but it seems like the sort of argument even the team Trump has put together might be able to win in court.

Corrections (May 29, 6:45 AM PST)

1. Reader Longtooth notes that the GAO link mentioned in the post is severed. This one works as of this writing.
2. Reader Longtooth also notes that I missed something in that document – not all criminal aliens are in the SCAAP program. For more detail, see the comments, but, about two-thirds of the criminal aliens are either known to be in this country illegally, or “unknown.” The latter group is believed by the states to be in this country illegally, and eligible for SCAAP funding. As far as I can tell, they are essentially aliens who cannot be shown to be in the country legally but have not, at the time they were arrested, come to the attention of the Department of Homeland Security. I think this needs a further look, but based on various statements in the GAO report, I now believe that illegal aliens are not 4X more likely to end up in state and local jails, but rather somewhere between a bit more than one and a bit less than 3 times more likely.

Leaving aside the question of crime rates among the undocumented, there is the issue that the SCAAP program deals involves taxpayer dollars. This information should be readily available, whether from the Justice Department or the General Accounting Office.

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Do Patents Lead to Economic Growth?

Recently I discussed a paper by David Autor, David Dorn, Gordon Hanson, Gary P. Pisano and Pian Shu. The paper noted that as competition from China increased, innovation by US firms, measured by patent output, decreased. I believe the result, but started to wonder… are patents a good measure of innovation? Do patents drive economic growth?

I don’t know how to measure innovation, but I can look at the relationship between patents and economic growth. We being by looking at patents per capita. I found patent data going back to 1840, and population to 1850.  The graph below shows patents per capita beginning in 1850. (All data sources provided at the end of this post.)

patents per capita 20170326a

Next, let’s compare that to growth rates. We would expect patents today to lead to growth tomorrow. So, I will add a line to the graph showing, for each year, the annualized growth rate in real GDP per capita over the next ten years. That is, for 1950, the growth rate from 1950 to 1960, and for 1980, the growth rate from 1980 to 1990. Unfortunately, real GDP per capita data begins in 1929, so the original graph gets truncated.

patents per capita v. annual change, real gdp per capita t to t+10

If it kind of looks to you like patents are not driving economic growth, well, it kind of looks like that to me too. In fact, if anything, the lines seem to be more negatively than positively correlated.  In years where there are more patents, the subsequent growth rate in real GDP for capita over a ten year period seems to go down.  Conversely, fewer patents in one year seem to be associated with more growth over the next ten years.

What’s going on?  Well, obviously, if there is no protection for developing intellectual capital, nobody is going to put much effort into creating that capital. On the other hand, protecting intellectual capital too well can stifle economic growth. For one, it requires spending an awful lot on on attorneys. For another, it forecloses on a lot of areas of potentially fruitful research by a lot of people who are worried about stepping into a mine field potentially defined by other people’s patents.

 

A few notes…

 

1.  I have a question. Anyone have any idea why there was a big rise in patents per capita beginning in 1983? What changed? Was it some aspect of the law? Something having to do with how research was written off? What’s going on?

2. Data… Data and estimates for the US population originates with the Census, but I’m using the set cleaned up by the Texas State Library and Archives Commission since its in an easy to use format. Since data was only available decennially with no annual estimates from 1850 to 1900, I linearized the decennial to generate my own annual estimates. Real GDP per capita comes from NIPA Table 7.1. Patent data comes from the US Patent Office.

3. If you want my spreadsheet, drop me a line at my first name (mike) dot my last name (that’s kimel with one m) at gmail with a dot com.

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Labor Conditions in Colonial America

Back in 1934, the Bureau of Labor Statistics produced a fascinating and very readable book entitled History of Wages in the United States From Colonial Times to 1928 : Bulletin of the United States Bureau of Labor Statistics, No. 604. There’s lots of cool stuff there, but it quickly becomes apparent that Colonial America was a whole other country than today’s America.

I want to quote extensively from the beginning of the book. (Note – I’m not going to copy footnotes.) It begins with a chapter entitled “Early Working Conditions and Wage Legislation.” The chapter begins with this:

“ High American wages” date from the beginning of the country, to judge from evidence contained in the earliest colonial records in which reference to wages is found. Letters and reports from agents of the British companies engaged in colonial settlement and from the early colonial governors, express consternation amounting to distress over the “ exhorbitant demands” of craftsmen and laborers. A colonial treasurer of the Virginia Colony declared, about 1625, that the wages paid there were “ intolerable” and “ much in excess of the sum paid to the same class of persons in England.” In 1633 Governor Winthrop, of the Massachusetts Bay Colony, noted that the “ excessive rates ” charged by workmen “ grew to a general complaint ” which called for legislative action, and a colonial governor in North Carolina complained that “ the Price of Labour is very high.”

From the workman’s side of the story comes similar testimony treated from a different viewpoint. Gabriel Thomas, who wrote a history of “ the Province and Countrey of Pensilvania” in 1698 for the purpose of inducing the poverty-stricken workers of England to emigrate, asserts that “ the encouragements are very greate and inviting, for Poor People (both Men and Women) of all kinds can here get three times the wages for their Labour they can in England or Wales;” and William Penn says in a letter that “ all provisions are reasonable but Labour dear, which makes it a good Poor Man’s country.” Another promoter, with a zeal suggestive of present-day publicity methods, wrote glowingly of the “ happy circumstances” in which laborers in New Jersey were placed in 1641.

Moving on:

Governor Winthrop, of the Massachusetts Bay Colony, declared in 1630 that the “ scarcity of workers caused them to raise their wages to an excessive rate;” a century and a quarter later Governor Dobbs, of North Carolina, reported that “ artificers and labourers being scarce in comparison to the number of Planters, when they are employed they won’t work half, scarce a third part of work in a Day of what they do in Europe, and their wages are from two shillings to 3, 4, and 5 shillings per Diem this currency.”

Today’s Planters, er, farmers sympathize.  Of course, today’s outrage is that workers get paid more in the US than in Mexico.

A bit later, still in chapter 1, we get a section entitled “Control of Workers”:

Both of these conditions, the scarcity of labor and the resulting high wages, were met differently by the northern and the southern colonies… The New England colonies undertook to meet them by regulation and legislation. If local laws limiting property holding and citizenship to “ freemen” and “ commoners” operated to exclude needed tradesmen from a town, the laws were either suspended in given cases or the town found some way to get around them in order to secure the desired services. Both Boston and Charlestown in 1640 waived certain of the citizenship requirements to obtain carpenters. As early as 1635 Lynn voted to admit a landless blacksmith, and later granted him 20 acres of land, thus keeping both the blacksmith and the letter of the law requiring that residents be landholders.

These concessions as a rule had strings to them. When 20 citizens of Haverhill, Mass., raised a subscription among themselves to purchase a house and land in order that a blacksmith could come into the settlement, they required that the smith agree to remain for seven years, and did not permit him to work for any person other than the 20 subscribers. The town of Windsor, Conn., presented a currier with a house and land and “ something for a shop,” but it was to belong to him and his heirs only on condition that “ he lives and dies with us and affords us the use of his trade.” Otherwise the property was to revert to the town. In 1656 William How was granted “ twelve acres of meadow land and twelve acres of upland ” in what afterwards became the great textile center of Lowell, Mass., “ provided he set up his trade of weaving and perform the town’s work.”

Once established in the colony, workmen were under the rigid regulation and control of a governmental system which, to quote Weeden, believed that it “ could legislate prosperity and well-being for everyone, rich or poor.” Impressment of labor was one tenet of that system, and “ either the public need or the demands of private business could enforce it.” As a rule it was only in harvest time that craftsmen were impressed into private service, but carpenters were sometimes drafted to build houses for individuals. Work on the public roads one day in the month was required of every workman in Salem, and he was subject to a fine of 3 shillings if he did not comply. When the selectmen of Dedham, Mass., decided to build a meeting house, the committee in charge was authorized to “ order men to worke upon the same.”

The next section of Chapter 1 deals with “Wage Legislation”

It was in legislation dealing with wages, however, that the authorities in the New England colonies made their most persistent efforts to control workers. Plymouth Colony and Massachusetts Bay Colony passed similar laws in 1630 fixing a maximum rate of pay. In Massachusetts Bay Colony:

It was ordered that Carpenters, Joyners, Brickelayers, Sawers and Thatchers shal not take above 2s. [48.6 cents] a day, and 16d. [32 cents] a day if they have meate and drinke, nor any man shall give more, under paine of 10s. [$2.43] to taker and giver; and that sawers shal not take above 4s. 6d. [$1.00] ye hundred for boards, att six score to the hundred, if they have their wood felled and squared for them, and not above 5s. 6d. [$1.33] if they fell and square their wood themselves. It was ordered that labourers shal not take above 12d. [24.3 cents] a day for their worke, and not above 6d. [12 cents] and meat and drink, under paine of 10s. [$2.43].

Although this law was not successful and operated less than six months, the court tried again in 1633, with lower rates and evidently greater determination, to dictate wages. The second ruling kept the same rate of 2s. a day for “ master” workmen—building tradesmen, mowers, and wheelwrights— but the rate with “ dyett” became 14d. (28 cents) a day instead of 16d. “ Master taylors” were allowed 12d. (24.3 cents) and “ inferior taylors” 8d. (16 cents) per day “ with dyett.” Instead of fixing the rate for laborers, or “ inferior” workmen, as did the 1630 act, that of 1633 left its determination to the town constable and “ two indifferent freemen,” probably for each and every given case.

Of course, it helps if the workers know their place.  The powers that be knew how to keep workers from developing fancy tastes that might lead them to get uppity, though truth to tell, a bit more than that might be happening in the quote below:

A few years later the court, “ aware that the board at public houses, if extravagant, not only required a corresponding price from the traveller, but also put him in the hazard of contracting a taste for similar fare at his own house, and thus promoted a costly mode of living, ever unfavorable to the pecuniary concerns of a community,” tried another way of helping the consumer. It declared that:

Whereas complaint hath bene also made that diverse pore people, who would willingly content themselves with meane dyet are forced to take such dyet as is tendered them at 12d. [24.3 cents] the meale or more; it is now ordered that every keeper of such Inn or comon vicualling house shall sell and allow unto every of their guests such victuals as they shall call for, and not force them to take more or other than they desire, bee it never so meane and small in quantity, and shall affoard the same and all other dyet at reasonable prizes upon paine of such fine as the Court shall inflict according to the measure and quantity of the offence.

This law was enacted in 1637.

Anyway, the book is chock full of good stuff. I might quote some more in later posts.

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Competition from China reduced Innovation in the US

Via Tyler Cowen, here is a piece by David Autor, David Dorn, Gordon Hanson, Gary P. Pisano and Pian Shu.

Cowen quoted the most important part, so let me follow his lead:

The central finding of our regression analysis is that firms whose industries were exposed to a greater surge of Chinese import competition from 1991 to 2007 experienced a significant decline in their patent output. A one standard deviation larger increase in import penetration decreased a firm’s patent output by 15 percentage points. Using data from the 1975 to 1991 period and a regression setup that accounts for the diverging secular innovation trends in computers and chemical, we confirm that firms in China-exposed industries did not already have a weaker patent growth prior to the arrival of the competing imports.

…The innovation activity of US firms did not merely shift from the US to other countries. We estimate similar negative effects of import competition on patents by US firms’ domestic employees and by their foreign employees. Instead, our results are most consistent with the notion that the rapid and large increase in competition squeezed firms’ profitability and forced them to downsize along many margins, including innovation. Consistent with that interpretation, we find that the adverse impact of import competition on patent output was concentrated in firms that were already initially more indebted and less profitable.

Here’s what I think is happening. Chinese imports typically enter a market from the bottom, with a low price and a reputation for low quality. After a few years, the quality begins to improve, though it takes somewhat longer for the reputation to follow.

From the perspective of incumbent players, the Chinese don’t play at the top of the market where the high margin flagships are, but they take up a lot of market share in the lower end products. But, though broadline products have slim profit margins, they keep the plants operating at capacity, and that’s what covers capital costs.

So… the existential threat to the incumbents comes from having higher costs than the new competitor. The natural reaction then, is to cut costs. Fire people, idle plants and reduce expenses like marketing and R&D.

Despite Schumpeterian theory, many of the most innovative (large) companies in post-WW2 America were monopolies or awfully close to it. Think Bell Labs, Xerox Parc or Skunk Works (i.e., Lockheed’s Advanced Development Projects) for classic examples from back in the day. Ma Bell could afford the time and money needed to do world-class research.  Today’s phone companies cannot. Smaller companies have other dynamics, and often they are the source of innovation in many industries.  Smaller innovators whose technology proves successful end up being bought (and sometimes ruined) by the more established players.

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What Percentage of Americans are Attorneys?

Here’s a graph showing the number of attorneys as a share of the US population:

attorneys as a pct of US pop 20170322a

The increase seems pretty inexorable starting around 1970, doesn’t it?

For grins and giggles, here’s snide graph on which I will make no comment:

attorneys as a pct of US pop v Growth in Real GDP per capita 20170322a

If you’re wondering where the lawyers live, a quick google search turned up this post which shows attorneys by state. Needless to say, the share of attorneys as a percentage of the population is greater in the District of Columbia than any of the states, by far.

Data for (“resident active”) attorneys used in these graphs comes are from the American Bar Association. The ABA’s website seems insistent that anyone referencing their data should state it is “Reprinted by permission of the American Bar Association. All rights reserved.” I am afraid to argue with them.

Data and estimates for the US population originates with the Census, but I’m using the set cleaned up by the Texas State Library and Archives Commission since its in an easy to use format. Real GDP per capita comes from NIPA Table 7.1.

If you want my spreadsheet, drop me a line at my first name (mike) dot my last name (that’s kimel with one m) at gmail with a dot com.

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How do We Reduce Misery Caused by Poverty Around the World?

A few weeks ago I had a post looking at the success of a number of countries. I noted that countries that do well include,

(in no particular order): the US, Canada, Northwest Europe, Switzerland, Scandinavia, Australia, New Zealand, Japan, South Korea, Singapore and, until China began applying a heavier thumb, Hong Kong. Those also happen to be the countries that would attract the most foreigners interested in being citizens, so this quick and dirty list should pass a basic smell test. (If some of these nations don’t have much of an immigrant population and don’t rank on high on the destination of potential immigrants, it is because they are very selective about the who they let in as opposed to being shunned by would be immigrants.)

So what do these places have in common? It isn’t natural resources. Just ask the Japanese. (Plus, in countries outside of the list above, being blessed by nature somehow correlates with suffering from the “Resource Curse.”) It isn’t Democracy as we know it. That’s a relatively new thing for South Korea, Hong Kong was ruled by foreigners for most of the last century, and then, of course, there’s Singapore. It isn’t coming into the post-WW2 period wealthy; quite a few countries on the list were in miserable shape in 1945. It isn’t a matter of exploiting other countries (which Americans of a certain bent are always fond of claiming is the US’ secret) – South Koreans will proudly tell you that the country has never invaded anyone in well over 2,000 years. Switzerland, too, is proudly neutral. The Scandinavians have also been pretty pacifist for well over a century as well. Small government? As much as libertarians like to claim Singapore for their own, ignoring the massive government participation in the economy (think Temasek, Singapore Airlines, Mediacorp, Singtel, Singapore Power, etc.). Nor did Japan, Inc. qualify. Something about about geography and environmental factors that these countries have in common? Nope and nope.

To be blunt, there doesn’t seem to be a factor or group of factors that can be applied to these countries but not to countries that are “developing.”

Let’s go the other way on this post. Most of us care about poverty. We’d like to see a world with less poverty, and more opportunity for everyone. Put a different way – it would be a wonderful thing if Bolivians, Burundians and Bangladeshis were able to live the lifestyle enjoyed by people of Switzerland, South Korea and Singapore. But wishing is easy. And useless. So… how do we get from here to there in a reasonable amount of time?

My answer is that it will take changing the culture. For example, most countries that do well tend to have a reputation for punctuality which is rarely shared in less developed countries. Of course, there is more than just punctuality. Find out what other aspects of the culture of South Korea, to use a specific example, work and export that culture. After all, South Korea was in very bad shape at the close of WW2, and by the 1980s was a force to be reckoned with. If Burundi makes the same transformation over the same period of time, many, many people’s lives will be much improved.

But at this blog, a lot of people don’t like “culture” as an answer. For reasons I frankly don’t get, saying culture is a big driver of economic outcomes is viewed is racist by many people. OK. Fine. But if then how do we do it? How do we reduce the misery that comes from the poverty that is so pervasive around the world?

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No evidence to back idea of learning styles

On Sunday, the Guardian published a letter signed by a number of prominent psychologists, cognitive neuroscientists and the like. Coincidentally, the list includes Steven Pinker who I happened to be quoting in a post from the same day.

Here’s the title:

No evidence to back idea of learning styles

Here are the first two paragraphs:

There is widespread interest among teachers in the use of neuroscientific research findings in educational practice. However, there are also misconceptions and myths that are supposedly based on sound neuroscience that are prevalent in our schools. We wish to draw attention to this problem by focusing on an educational practice supposedly based on neuroscience that lacks sufficient evidence and so we believe should not be promoted or supported.

Generally known as “learning styles”, it is the belief that individuals can benefit from receiving information in their preferred format, based on a self-report questionnaire. This belief has much intuitive appeal because individuals are better at some things than others and ultimately there may be a brain basis for these differences. Learning styles promises to optimise education by tailoring materials to match the individual’s preferred mode of sensory information processing.

Here are the last few paragraphs:

Finally, and most damning, is that there have been systematic studies of the effectiveness of learning styles that have consistently found either no evidence or very weak evidence to support the hypothesis that matching or “meshing” material in the appropriate format to an individual’s learning style is selectively more effective for educational attainment. Students will improve if they think about how they learn but not because material is matched to their supposed learning style. The Educational Endowment Foundation in the UK has concluded that learning styles is “Low impact for very low cost, based on limited evidence”.

These neuromyths may be ineffectual, but they are not low cost. We would submit that any activity that draws upon resources of time and money that could be better directed to evidence-based practices is costly and should be exposed and rejected. Such neuromyths create a false impression of individuals’ abilities, leading to expectations and excuses that are detrimental to learning in general, which is a cost in the long term.

One way forward is to draw attention to practices that are not evidence-based and to encourage neuroscientists and educationalists to promote the need for critical thinking when evaluating the claims for educational benefits supposedly based on neuroscience. As part of Brain Awareness Week that begins 13 March, we support neuroscientists going into schools to talk about their research but also to raise awareness of neuromyths.

Your thoughts….

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