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

On the Malleability of Cultural Traits – a Look at Irish-British and German-Americans

Authored by Mike Kimel

The way the immigration process was structured from 1921 to 1965, 70% of immigrants to the US came from Britain, Germany and Ireland.  In a recent post I noted that the proportion of great writers to scientists in Ireland tended to be a lot higher than for Britain and Germany.  I also noted that these cultural traits persisted for a long time, and even survived immigration; the ratio of great Irish-American writers to scientists is higher than the ratio of great British-American or German-American writers to scientists.  I also noted some evidence that the same is true in Argentina among populations descended from Ireland, Britain, and Germany.  

Assume for this post that STEM has been as important to economic growth as it appears.  Then, as a country, we probably would have grown more quickly if there had been fewer immigrants from Ireland and more from the UK and Germany.  Alternatively, as a country, we probably would have grown more quickly if more immigrants arrived in the US with a STEM background, which of course would have required more vetting of the immigrants.  Another way we could have grown more quickly would be if immigrant children, as well as the native born population, grew up with increased likelihood of going into STEM vocations.  

Since the writer to scientist proportion is lower among Irish Americans than among British and German-Americans, the lower hanging fruit, so to speak, probably lies there.  At the margin, German-Americans are already picking STEM over writing, whereas their Irish-American counterparts are more likely to have gone the other way.   Even making an assumption that seems entirely unwarranted to me, namely that there is some intrinsic reason why the descendants of Irish will, on average, do more poorly at STEM vocations than the descendants of British or German people, it is still likely that Irish-Americans constitute the lower hanging fruit when it comes to STEM.  

To put things a different way, growth would have been faster had we, as a population figured out how to reduce the writer to scientist ratio, and doing so among Irish-Americans would have been more beneficial than doing so among British- and German-Americans.   

So what drives more people to do X rather than Y for a living?  Sometimes it just happens, courtesy of progress and technology.  For instance, the American labor force working in agriculture has gone from upwards of 90% around the time of the Revolution to below 2% today.  In turn, the share of American kids who plan to become farmers when they grow up has dropped at roughly the same pace.

But such changes can also be engineered.  Through the careful application of petro-dollars, liberally marinated over a few decades, our Saudi allies have gotten a lot of people to live a fundamentalist lifestyle.  They did so, in part, by creating a lot of employment for clerics throughout the Middle East and the rest of the world.  Similarly, the Soviet Union generated a fair amount of demand for political commissars (and at one point, for biologists steeped in the Lysenkoist school).  And in today’s world, when your reservoir of Juche runs low, just head on over to the, ahem, Democratic People’s Republic of Korea.  The DPRK has got plenty of experts who can fill absolutely all your Juche needs, from applied to theoretical. 

There are plenty of levers – money, time, religion, politics, outright decrees – that have been used to change cultures throughout the world.  Any and all of them can be used to change the ratio of writers to scientists among the Irish diaspora or in most any other group of people you can name.

In follow-up posts, I want to look at factors that affect whether a given attempted cultural change of this sort succeeds or fails.  After all, many such attempts have failed, and the consequences are often disastrous.  

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How Punctuality Affects Production

authored by Mike Kimel

Earlier this month, I wrote a post noting that countries where punctuality is more highly prized in the year 1999 tend to have higher GDP per capita in both the year 2000 and in 2015.   I would like to follow up with a bit about how that happens, which I had I intended to post in the comments to that piece.

My sister is currently in Northeastern Brazil, which is not unusual.  By my reckoning, she has spent between twenty and twenty-five years in the country and has a condo in Natal.  She loves the country and the people.  (As do I, I might add.)  At the moment, she is helping a Brazilian friend rebuild/expand a small hotel he owns close to the beach.  

I get periodic updates via “WhatsApp,” including videos of geese and pictures of monkeys.  A lot of her stories being told would surprise the average American.  To a Brazilian, or anyone with experience in South America for that matter; it is the usual litany:

1. Almost nothing happens on time.  Most of the crew is late every day.  Sometimes hours late. 

2. Less periodic events (e.g., delivery of materials) are also usually late.  Sometimes by more than 24 hours.
 
3. The result is there are always people standing around, which results in wasted capacity and resource.  You need the crew there in case the cement mixer rolls in; but in reality, it might not actually arrive until the day after it was scheduled.  Or maybe, it may arrive the day after that.  Of course you plan around it or have contingencies; but no matter what, the result could be less wasted time, energy, and resource if everything happened as planned.  Put another way, the lack of punctuality reduces the amount of work being done and production produced.    

As I noted last month, my wife is in a similar line of business . . . she buys, rehabs, and rents-out residential rental properties in Northeast Ohio.  She also deals with crews and the schedules she builds always have contingencies and room for such events as painters not showing up or electricians arriving stumbling drunk and belligerent.  The reason tor the contingencies is because it happens.  (In the post describing that, I contrasted with my own white collar world, where in twenty years I never once had to plan around whether someone was going to show up drunk, and my failure to plan for that eventuality has never mattered.)   

And yet, my wife alternates between horrified and humored by my sister’s stories.  For my wife, a person or delivery showing up late enough or material being defective enough to affect the workflow usually happens once per job. (As an FYI, it takes between two to six weeks to rehab a single family home in Northeastern Ohio, depending on the state of the house when we buy it.  I cannot imagine a similar timeline happening in Northeastern Brazil.)   

In my sister’s world, that’s how things are all the time.   It is the difference between standing on the pier and being a fish.

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 “Wrestling With Racism – Are These Questions Racist?”

Authored by Mike Kimel

Here’s a story widely reported in England from earlier this year:

A black former soldier is suing the Ministry of Defence after he was injured when his hands were exposed to temperatures of -30C during training.

Abdoulie Bojang, 30, is suing for £200,000 after he suffered career-ending injuries when he was exposed to below-zero temperatures in Banff, Canada during training.

He says the army ‘failed to take into account his ethnicity’, and is suing over non-freezing cold injuries…

A spokesman for solicitors Bolt Burdon Kemp said: ‘Service personnel of African and Afro-Caribbean descent, including those of mixed race, are particularly vulnerable in low temperatures.’

‘The MoD has acknowledged research indicating that these groups are 30 times more likely to contract an NFCI (non-freezing cold injury) than Caucasian service personnel.

Here is a similar story reported in 2009.  This is not a new issue.  And here is another story a Ghanaian-born soldier with a similar lawsuit

I assume that if the MoD has acknowledged such differences are real, they probably are, but beyond that, I will not pretend that I am qualified to have an opinion on medical issues.  However, I do have some questions:

1.  Given this article, is it racism to treat one group of soldiers differently in cold weather based on that group’s ancestry?

2.  Given this article, is it racism not to treat one group of soldiers differently in cold weather based on that group’s ancestry?

3.  Do answers to 1 & 2 change if the notion that a person’s ancestry affects that person’s vulnerability to the cold is true?

4.  Do answers to 1 & 2 change if the notion that a person’s ancestry affects that person’s vulnerability to the cold is not true?

5. If people of a particular ancestry are disproportionately likely to be affected by cold, what is the likelihood that groups of people with a different ancestry are disproportionately likely to be affected (positively or negatively) by other conditions? 

6.  Under what conditions would it be racist to account for issues described in question 5?

7.  Under what conditions would it be racist not to account for issues described in question 5?

Please share your answers in comments.

(Note – this post is not a follow up to this one, but the two posts do reside in the same world.)    

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Punctuality Today v. GDP per Capita Tomorrow; A Look at a Few Countries

Authored by Mike Kimel

In this post, I want to demonstrate the importance of a specific cultural trait, namely punctuality, on the economy.  The difficulty, of course, is coming up with a good measure of punctuality, and in particular, one that isn’t regularly gamed.

Digging around, I found a paper entitled The Pace of Life in 31 Countries by Robert V Levine and Ara Norenzayan in the Journal of Cross Cultural Psychology in 1999.  For the purposes of this post, the most interesting thing about this paper was this measurement:

As a sample of concern with clock time, the accuracy of 15 clocks, in randomly selected downtown banks, were checked in each country. The criterion for the correct time was that reported by the telephone company.

The 31 countries span the globe, and seem to encompass every inhabited continent, though it should be said, the list is Europe-heavy; unless I miscounted, 14 of the 31 countries are in Europe.  The clock accuracy results for the countries, as well as several other measures of less relevance to this post, are returned in a table in the paper.  I then compared those results (compiled in or before 1999, I remind the reader) with the real GDP per capita in US dollars for those same countries in 2015.  That data was pulled from World Bank tables.  The World Bank data excluded two of the countries in the Levine & Norenzayan paper, Taiwan and Syria.

Here’s what the data looks like, graphed:

clock inaccuracy 1999 v gdp per capita 2015

I took the liberty of highlighting and labeling the three points at either end of the curve.

The figure shows that the correlation between the natural log of clock inaccuracy, as measured in average seconds of clock error in or before 1999 and real GDP per capita in 2015 is -0.56.  That is, countries with more accurate clocks in or before 1999 tend to be wealthier in 2015.  Note also that the correlation is a bit lower (-0.50) when data from the year 2000 is used.  This suggests that if there is a causation, it isn’t running from wealth to clock accuracy.

Frankly,  there are a few anomalies with the graph, and they tend to be where my intuition doesn’t match the accuracy ranking provided by Levine and Norenzayan.  Having stated that, I should note that my intuition is informed primarily from having lived abroad for about a decade and a half, and from having a fair number of interactions (professional and personal).  For example, Italy ranks second in clock accuracy, but my experience is that there are a fair number of Italians who tend to be relatively tardy to meetings, etc., relative to people from a number of other European countries.  My admittedly snide hypothesis is that the Italian post office’s clock is simply just as late as the clocks in private Italian banks.  Not surprisingly (to me, anyway), Italian GDP per capita is 9th among European countries included by Levine and Norenzayan, not 2nd.  

Nevertheless, despite the anomalies, at a high level, this data seems right to me, and it provides a bit of confirmation to the idea that punctuality is tied to positive economic outcomes.  

The backstory, for those interested:

A few weeks ago, I had a post showing that at the national level, over the past few decades, there is a negative correlation between immigration and subsequent job creation.  In a more recent post, I looked at state level data to determine whether states with a greater percentage of immigrants created more or fewer jobs for the native born population. The results showed that outside the old Confederacy, the more immigrants as a share of the population, the less jobs were created for the native born population.  In between the two posts, I tried to provide a few explanations for why the observed relationship exists.

In the “explanations” post, I mentioned cultural traits as issues that make a difference in whether immigrants contribute positively or negatively.  In the comments to the post, I mentioned timeliness (i.e., punctuality) as one such trait.  That statement met with resistance from other commenters.  It was even suggested that such a view might be racist.  This post is intended to support my comment.

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Hate Crimes, Plus a Question for US Senate Candidate Kamala Harris

Authored by Mike Kimel

Let’s start with the lede: from what I can tell, according to Kamala Harris (California State Attorney General and candidate for the US Congress), the ISIS-inspired massacre of 14 people in San Bernardino was not a hate crime.  

And now, the story, with some meandering around interesting facts.  The Los Angeles County Commission on Human Relations 2015 Hate Crime REPORT was just released.  

One interesting passage in the report is this:

The great majority of African Americans and Latino/as in Los Angeles County co-exist peacefully and are not involved in ongoing racial conflict. However, for many years this report has documented that most hate crimes targeting African Americans are committed by Latino/as and vice versa. This is particularly true in neighborhoods that have undergone rapid demographic shifts from being primarily black to majority Latino/a. The other factor driving this phenomenon is the large number of Latino/a street gangs which have ties to the Mexican Mafia, the largest and most violent prison-based gang. The Mexican Mafia has been feuding with black inmates for decades and has encouraged their affiliated street gangs to drive African Americans out of their neighborhoods.

Strictly from a data point of view, I wonder how many of the crimes described in the above paragraph are just turf wars.  Are these really any different from when two X gangs go at it, with X being any particular racial or ethnic group?

Another interesting factette:

Anti-Jewish crimes were followed by those targeting Muslims (19%), Christians (5%), Jehovah’s Witnesses (3%) and Catholics (2%). This represented a large increase in the number of anti-Muslim crimes, from to 3 to 19. As a percentage of all religious crimes, anti-Muslim crimes jumped from 4% to 19%. Four of these took place after the November 13 terrorist attacks in Paris that claimed the lives of 130 people and seriously wounded nearly 100 more. There were also 9 anti-Muslim/Middle Eastern crimes that occurred following the December 2 terrorist attack in San Bernardino in which a Muslim couple attacked a San Bernardino County Department of Public Health holiday party killing 14 employees and seriously wounding 22.

Fortunately, the majority of those crimes took the form of vandalism, intimidation and disorderly conduct.  There were also 8 simple assaults and 4 aggravated assaults which are more serious, and luckily, no murders.  

With that said, two thoughts.  First, there is little information on the perps of anti-religious hate crimes, but one blurb says:

A Middle Eastern male entered a synagogue and shouted, “I’m going to kill all Jews”. The suspect attempted to use a stun gun to harm one of the members.

In keeping with explanation of anti-Black and anti-Latino crimes quoted above, it would have been interesting to know whether anti-Jewish or other anti-religious crimes are often perpetrated by individuals who can be described as “Middle Eastern.”   

My second thought also inolved the “Middle Eastern” angle.    I thought it would be interesting to see how the San Bernardino massacre was treated in official reports on hate crimes.  Of course, San Bernardino is not in Los Angeles County, so I went to the Hate Crime in California put out by California State Attorney General Kamala Harris.

So there’s no mistake in what information is reported, I quote:

Hate Crime in California, 2015 reports statistics on hate crimes that occurred in California during 2015. These statistics include the number of hate crime events, hate crime offenses, victims of hate crimes, and suspects of hate crimes. This report also provides statistics from district and elected city attorneys on the number of hate crime cases referred to prosecutors, the number of cases filed in court, and the disposition of those cases.

Also, in the appendix, we learn:

California Penal Code section 422.55 defines a hate crime as “a criminal act committed, in whole or in part, because of one or more of the following actual or perceived characteristics of the victim: (1) disability, (2) gender, (3) nationality, (4) race or ethnicity, (5) religion, (6) sexual orientation, (7) association with a person or group with one or more of these actual or perceived characteristics.”

Now, table 6 on page 17 lists hate crime “events,” “offenses,” victims and suspects by jurisdictions, including those that occurred in the city of San Bernardino.  Those numbers are, respectively, 4, 5, 4, and 4.  Additionally, we learn from Table 2 that a total of three of the Hate Crimes in the state of California in 2015 were hate crimes.  So it is safe to assume that the San Bernardino massacre does not qualify for inclusion in the report.  Since it also was too significant to ignore or simply misplace, one can only conclude that it wasn’t a hate crime according to the authors of the report.

Kamala Harris, whose name appears on the front cover of this report, is running for the US Senate.  I wish someone would ask her why 14 people being killed by radicalized, ISIS inspired individuals engaging in what they would call jihad doesn’t qualify as a hate crime.  

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A Lesson from Project and People Management

Authored by Mike Kimel

I straddle a couple of economic worlds.  In my day job, I run the Pricing and Market Analytics group for a foreign manufacturing company.  But I also retain at least an ear to the ground in a small business my wife and I started about seven years ago.  We buy, fix up, and rent out residential properties in Northeast Ohio.  My wife runs day-to-day operations.  In the past few years, we’ve also taken on a long time family friend as business partner.  Like my wife, he has a lot more daily involvement than I do, though like me, he has a white-collar job. 

The juxtaposition between the three of us got me thinking about the difference between what my wife does and what I do at my job.  To a large extent, I manage people and projects.  My wife does the same thing.  But if I have scheduled someone to do X, I don’t have to worry about whether they will show up falling-down drunk, or even whether they will show up at all.  In two decades of work, those issues have never come up.   My wife, on the other hand, deals with that kind of thing regularly.  Not with every plumber or electrician or construction worker, mind you, but it happens a lot. 

None of this is to say that Blue Collar work is worse than White Collar work, but my experience is that more Blue Collar people would trade places with White Collar workers than vice versa, all else being equal.  However, where people end up in life owes a lot to luck, ambition, desire, willingness to work and presentation.  The inability to keep one’s vices in check, however, can and often will  negate everything else, and there are a lot people who have demons they cannot control.

One more observation.  People who get fired from a work site because they are drugged or inebriated enough to threaten themselves or others can get belligerent.  The boss who fired them, even if it comes after the second or third “second chance” is always, to them, an expletive. 

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 “Immigration and Job Creation at the State Level”

Mike Kimel continues his discussion on how Immigration impacts Job Creation.

In this post, I am looking at how the percentage of a state’s population that is made up of immigrants affects job creation.  After all, we hear from some quarters that immigrants create jobs, and from others that immigrants take away jobs that would otherwise go to Americans.  Obviously, the truth is sometimes one and sometimes the other, and mostly somewhere in between.  It depends on many factors, including the nature of the immigrants themselves, who, like anyone else, vary in attitude, capability, sociability, etc.  Even so, understanding whether in aggregate, immigrants help or hinder, and under what conditions, is worth knowing.

As I was pulling data, it occurred to me that I had phrased the question poorly.  The relevant issue is not whether immigrants create jobs.  It is whether immigrants create jobs for the native population.  If you doubt that, I’ve got an experiment for you to perform.  Go to Chetumal.  From the pictures I’ve seen, it seems like a very pretty town in Mexico on the border with Belize.   Meet with the mayor, and tell him (at this time the mayor is a man) you will renovate a factory and put 100 people to work in his town.  I bet he will be ecstatic.  Now explain that your plan involves hiring 110 Belizeans and firing 10 Mexicans who are currently employed.   My hypothesis is that the mayor’s mood will noticeably sour at this point.  You don’t actually have to go with Chetumal to run this experiment.  Pretty much any jurisdiction not run by a US politician will probably do.

Having established the question, here’s how I tackled it.

1.  I found data on the immigrant share of each state from Pew Research.  Data is available in 10 year increments from 1960 to 2010, and then for 2014.  Pew references the American Community Surveys, so I am 99.97% certain that all of the data originates with the Census, but I couldn’t find it there.

2.  I found data on monthly reports containing, among other things, “employees on nonfarm payrolls by state” for every month going back to December 1993 at the BLS

3.  There are three years for which the immigrant data can be matched to employment data:  2000, 2010, and 2014.  For each of those years, I used employment figures for December and the immigrant share of the population to calculate the “native born employment.”  That is, the number of jobs held by native born people.

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UVA Slushfund just the tip of the Iceberg

In July, the former Rector at the University of Virginia, Helen Dragas, accused the school of having created a $2.3 Billion “slush fund” during a period when the university had raised tuition on students by 74%, and cut grant aid to poor students. While this is an astounding story in itself, the fact of the matter is that there is much, much more to this story than meets the eye.

In 2013, it was discovered the University of Wisconsin had similarly amassed between $400 million and $1 Billion in reserves, built largely from excess tuition income. Members of the state legislature, furious that the college had been stockpiling cash while using stories about their dire financial straits to convince the state to allow them to raise their tuition, actually demanded that the president of the university resign. However, the president ultimately was able to hang on to his job by using, essentially, a“but everyone’s doing it” defense.

The university compiled a list of similar cash stockpiles their peer institutions had accumulated, roughly during the same time. As the table below shows, the numbers are staggering.

slush fund

While the University of Wisconsin had built up assets exceeding $1 Billion, they were correct about their peer institutions engaging in similar hoarding activities and some to a far greater degree. The University of Texas, for example, had amassed $9.5 Billion in restricted assets, and another $3.5 Billion in unrestricted assets. The University of Michigan had stockpiled $3.3 Billion in restricted assets and $2.5 Billion in unrestricted assets. Even relatively small, private schools like Temple University had managed to squirrel away billions in expendable assets! A couple of years ago, I was at a meeting where the president of a smallish community college in central Illinois bragged that the school had managed to amass some $80 million in reserves. I held my tongue at the time; but, the time for silence on this issue is over.

These revelations scream out for further scrutiny. If ever there were a worthy subject for investigative journalist teams to examine, the growth of college/university slush funds is ready for sunlight. Remember, these mountains of cash are over and above the endowments of these schools and only came into being over the past ten years. The universities are claiming that this is prudent fiscal management, but the facts of the matter speak for themselves. These pots of money barely existed ten years ago. Now they are everywhere and they are everywhere HUGE.

If these numbers are at all representative of Academia broadly, it is quite safe to say that the cumulative total of these stockpiles could easily exceed the combined value of all college endowments (about $630 billion), and could even match the size of all student loan debt in this country (roughly $1.4 Trillion).

Colleges and universities in this country have raised their tuition at record rates over the past ten years. All have also given administrative staff massive increases in pay, and most have undertaken massive capital improvement projects. They justified their tuition hikes by citing state cuts in funding. This is a complete fiction. In fact (but for a slight dip in the wake of the financial crisis of 2008), the states have consistently increased their funding to colleges, in real dollars, roughly with the rate of inflation. These cuts the colleges claim to have happened, never happened and are really only college officials pointing to the fact that the states “slice of the budget pie” is now smaller due to the colleges skyrocketing operating budgets. This blatant dis-ingenuity of the higher education complex must end.

While Helen Dragas is undoubtedly being vilified by her colleagues, she should be given a medal for demonstrating that at least one college official as the moral compass to point to what is obviously wrong, and demand that the universities be held accountable for their greed, and their gross neglect of the community purpose that they claim to serve.

run75441: The slush fund build is going on at the same time cuts in funding for minority and low income students is occurring. Much of the funding for tuition for lower income and minority students is going to higher income students.

Alan Collinge is Founder of StudentLoanJustice.Org, and author of The Student Loan Scam (Beacon Press). Alan Collinge has been featured at Angry Bear over the years.

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A Tale of Two Countries and Labor

I struggled with whether to add this to Sandwichman’s post or start anew. This is along the lines of what he might talk about in preserving Labor by limiting hours when there is only so much work to be done. Take note on how Sweden handled it as compared to the US.

In the US, in particular, the ability of labor to protect its share of national income, and of lower and middle-income households to protect their share of the wage pool, eroded substantially. As a result, real growth in median disposable income slowed by nine percentage points from 1993 to 2005, and by another seven percentage points from 2005 to 2014.

Sweden, where median households received a larger share of the gains from output growth in the 2005-2014 period, has bucked this negative trend. In response to the growth slowdown of the last decade, Sweden’s government worked with employers and unions to reduce working hours and preserve jobs. Thanks to these interventions, market incomes fell or were flat for only 20% of households. And generous net transfers meant that disposable incomes increased for almost all households.

To be sure, the US also intervened after the crisis, implementing a fiscal stimulus package in 2009 that, along with other transfers, raised median disposable income growth by the equivalent of five percentage points. A four-point decline in median market income thus became a one-percentage-point gain in median disposable income. But that did not change the fact that, from 2005 to the end of 2013, market incomes declined for 81% of US households.

Similarly, recent research by Berkeley’s Emmanuel Saez shows that real market income for the bottom 99% in the US grew in both 2014 and 2015 at rates not seen since 1999. Nonetheless, by the end of 2015, real market incomes for that group had recovered only about two-thirds of the losses borne during the 2007-2009 recession. In other words, while disposable income did not fall in either Sweden or the US, the US approach was to compensate for a decline in market incomes, which Sweden had managed to head off.

The Great Income Stagnation Laura Tyson and Anu Madgavkar, Project Syndicate.

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