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The Last Economist to Understand that Bad Policy Has Ill Effects

Nobel Memorial Prize Winning Economist James Heckman has a piece in the Opinionator section of the NYT (is that a printed section, by the way, or online-only?) that reveals the lie behind the farce that is Arne Duncan’s “leadership”:

 Children raised in disadvantaged environments are not only much less likely to succeed in school or in society, but they are also much less likely to be healthy adults. A variety of studies show that factors determined before the end of high school contribute to roughly half of lifetime earnings inequality. This is where our blind spot lies: success nominally attributed to the beneficial effects of education, especially graduating from college, is in truth largely a result of factors determined long before children even enter school.

This comes as a surprise to absolutely no one. The menu at Denny’s adveritises that children who eat breakfast perform 20% better than those who don’t. I’m guessing that one reason the difference is that low is that some portion of those children eat breakfast at Denny’s, and become too soporific by midmorning to concentrate, while the kids whose stomachs are growling until lunch miss even that opportunity.

As Heckman notes, any sane economist would support Earlier and Earlier Interventions:

Critics say that early childhood education is expensive and that it is not effective. They are right about the cost, but terribly wrong about the large return on the investment. Quality early childhood programs for disadvantaged children more than pay for themselves in better education, health and economic outcomes.

Proof comes in the form of a long-term cost-benefit analysis of effective early childhood programs….

[The Perry Preschool project] did not produce lasting gains in the I.Q.’s of its participants, but it did boost character skills that produced better education, economic and life outcomes. The economic rate of return from Perry is in the range of 6 percent to 10 percent per year per dollar invested, based on greater productivity and savings in expenditures on remediation, criminal justice and social dependency. This compares favorably to the estimated 6.9 percent annual rate of return of the United States stock market from the end of World War II to the 2008 meltdown. And yes, these estimates account for the costs of raising taxes and any resulting loss of economic activity.

There’s your bloody Equity Premium.

Heckman’s other example is one place where “ObamaCare”–credit where due, Obama is the first president to live under a few years of state-sponsored health care*–makes replication even easier:

A similar long-term early childhood study, the Carolina Abecedarian Project, better known as ABC, gave cognitive stimulation, training in self-control and social skills, and parental education starting in the first few months of life. The children were also provided with health checkups and health care. Four groups of individuals born between 1972 and 1977 were randomly assigned to treatment and control groups, and their progress has been monitored so far through studies conducted at ages 12, 15, 21 and 30. This program had lasting effects on I.Q., parenting practices and child attachment, leading to higher educational attainment and more skilled employment among those in the treatment group.

Most dramatic were ABC’s effects on lifelong health. Now, over 30 years later, those treated in ABC have lower blood pressure, lower abdominal obesity, less hypertension and less likelihood of metabolic syndrome and cardiovascular conditions as adults. This evidence clearly shows the power of quality early childhood programs for producing flourishing people with healthier lives, which increases productivity and lowers health care costs. [emphases mine]

If we’re going to live longer, we also need a workforce that is able to work longer. Otherwise, we end up with what I will call The Mannion Conundrum, after one of Lance’s posts.**

And it’s easier to live longer if you start life on a better footing.  My kids spent a year qualified for Free Lunch, but at least they started on first base.

Of course, Heckman isn’t the first economist to notice that early intervention–including health, nutrition, and education–pays dividends.  It’s just that the most prominent “Nobel Memorial Prize Winning Economist” to point that out is fictional.  Which, sadly, doesn’t mean he wasn’t correct then (and isn’t even moreso now).  So even as John Kasich pillages his own, let’s look back on the better days when people paid attention to an Economics Professor who knew from which he spoke, Josiah Bartlett:



James Heckman couldn’t have said it better. And would probably be very happy with the Korean subtitles, since they followed a version of his recommendations in the post-1953 era.


*Hawaii has had the Prepaid Health Care Act since 1974, when BarryO was 13.

**Not this one  (which is brilliant) or this one (which is a spot-on takedown of too-common economic theory from an economist who should know better), but one I cannot find right now.

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About that Alleged Decline of CNN…

There has been a bit of breast-beating among the blogsphere about how CNN has become shite. A few weeks ago, it was All Zimmerman, even as trains crashed and wars broke out. (See here and here, for instance.)

I’m just not convinced it has changed that much. As the Most Profound Philosopher of Our Generation observed almost twelve years ago (late October 2001):

I’m just a singer of simple songs
I’m not a real political man
I watch CNN but I’m not sure I can tell
You the difference in Iraq and Iran

Less than eighteen months later, the Bush Administration was able to exploit that confusion and shift from attacking terrorism to attacking sovereign entities and its own people.

It’s not that CNN has stopped doing their job so much, perhaps, as that they never did.

Comments (1) | | Coding Fail

I was going to write a post called “Barack Obama Fellates the Shark, then Wonders Why It Bites Off His Lower Half,” but decided instead to go for comedy instead of pointing out that the 2014 midterms are going to make 2010 look like the peak of LibDem activism. is “a place to share and follow research”; think JSTOR without the cachet of the Springer/Pearson/Addison/Blackwell/Wiley Publishing MAFIA, or maybe a low-rent, open-source NAP.  So when friend of this blog and professional Health Economist Michael Halasy signed on and reached out, I figured it only made sense that I would follow his postings as well.  (After all, he might actually write something. But I digress.)

So I clicked the link on the email and got this screen:


I do understand that maybe I don’t have the appropriate cookie on this machine. But look at the listing at the Connect with Facebook link.

Really, guys: I should connect with Facebook because people I know on Facebook–myself, for instance–connect with Facebook.

One has to laugh.  The alternative is to think about Obama’s attempt to destroy my childrens’s lives for No Good Reason.  Which someone else will blog about much more politely than I.

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The Ledeen Doctrine – Who Do We Invade Now?

Back in 2002, Jonah Goldberg wrote this in the National Review:

So how does all this, or the humble attempt at a history lesson of my last column, justify tearing down the Baghdad regime? Well, I’ve long been an admirer of, if not a full-fledged subscriber to, what I call the “Ledeen Doctrine.” I’m not sure my friend Michael Ledeen will thank me for ascribing authorship to him and he may have only been semi-serious when he crafted it, but here is the bedrock tenet of the Ledeen Doctrine in more or less his own words: “Every ten years or so, the United States needs to pick up some small crappy little country and throw it against the wall, just to show the world we mean business.” That’s at least how I remember Michael phrasing it at a speech at the American Enterprise Institute about a decade ago (Ledeen is one of the most entertaining public speakers I’ve ever heard, by the way).

It’s been ten years since the US did anything Goldberg (and presumably Ledeen) might describe as picking up “some crappy little country” and throwing it “against the wall, just to show the world we mean business.”   I did a quick Google search – if either man has backed away from the Ledeen doctrine, it doesn’t come up.  As a result, I presume they’d cheerlead any attempts to show some other country what-for.
But there are other neocons seem to feel a show of force some kind is needed at this time.  The National Review staff described a recent interview with Charles Krauthammer this way:
Referring to press secretary Jay Carney’s warning that allowing Snowden to leave will undoubtedly harm China’s relationship with the U.S., Krauthammer argued that nobody in Beijing takes President Obama’s threats seriously: “Nobody worries or cares about what Obama says because it carries no weight.”
Bear in mind, back in 2001, after a Chinese pilot bumped an American spy plane over international waters, seized the crew, dismantled the plane piece by piece to reverse engineer the plane’s technology, charged the US for room and board for “the well-being of the crew” and then got an official apology from the US government, Krauthammer  described events this way:
China lost.
Krauthammer apparently is arguing that the US government is showing more weakness now than when it agreed to leave a tip for hostage takers.  And we know, from past experience, what he’d recommend to shed an appearance of weakness.  And yet, there doesn’t seem to be much of a clamor from the usual suspects for following the Ledeen doctrine these days.
So, for grins and giggles, pretend you’re one of them…  who would you propose invading, and why?  And tell your friends.

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Catch of The Day: Tim Duy

Carpe diem, indeed:

Mr Bernanke’s own appointment in 2005 was a case in point. There were several candidates that year. According to people involved, then-President George W. Bush leaned towards Martin Feldstein, a former economic adviser to Ronald Reagan….

But Mr Feldstein was a director of the insurance company AIG, which restated five years of financial results that May after an accounting scandal.

Note—especially all you Hank Greenberg sycophants—that the AUG restatements were from 2005, long before anyone admitted the Emperor of AIGFP had no clothes.

Go read the whole thing, attending especially to:

So, no, Bernanke does not view quantitative easing as acting only through equity price and related wealth effects, and no, Feldstein shouldn’t either. But somehow he does, or wants to trick you into believing that Bernanke’s only objective is boosting equity prices. Either way, I don’t think this is the intellectual approach we should be looking for in a Fed chair.

Talking your own book as if it were your superior rivals. Feldstein and AIG were perfect for each other.

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Milton Friedman was Correct. Especially about his Alma Mater.

As my 35+-year wish to be an alumnus of a Big Ten school* approaches fruition, it is, perhaps, time to see what the cost of that ambition has been. Not to me; I got my Masters in Economics from the same school that granted Elizabeth Warren her J.D., and I don’t regret a moment of it. But rather to the school itself, which not only abided a basketball coach who combined the temper of Bobby Knight with the skills of Professor Wagstaff, but threw monies at a mediocre coach (look at his record without Ray Rice) who took the money–including a stadium renovation that worsened the experience for the student body–and ran.** Observers of the school suspected there might be problems when the aforementioned coach got his team bowl-eligible, accepted the invitation–and then lost money for the school on the bowl itself. Have things gotten better since late 2006? Well:

Rutgers University last year cut its direct support for the school’s athletics program by nearly $1 million. But that did not greatly reduce the total $28 million subsidy pumped into the money-losing program to cover the costs of campus sports from football to volleyball. Students picked up part of the difference. Stung by ongoing criticism over the amount of money Rutgers spends each year to subsidize athletics, university officials say the game plan is to gradually decrease the university’s support in the coming years, relying more on ticket sales, donations, licensing and other revenue to sustain the teams. “I can see us moving to budget neutrality in six years,” university president Robert Barchi said last week.

That’s what one might have said six years ago. How can you tell when a Rutgers University President is lying…he’s proving Milton Friedman correct.

(Cross posted from Skippy the Bush Kangaroo)

*Two of my four college applications were to Big Ten schools. But when costs were compared, Morningside Heights turned out to be less expensive than West Lafayette.

**”Transforming the Scarlet Knights from an unknown into a consistently competitive, winning and respected program.”

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