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21 Oct 11:39

Top firms and the decline in local product-market concentration

by Rossi-Hansberg, Sarte, Trachter
Recent literature has documented increasing US product-market concentration at the national level. This column argues that when measured at the more relevant local level, concentration has actually decreased over the last 25 years on average and in all major sectors. In the many industries with diverging national and local trends, top firms are bringing down local concentration even as they increase national concentration. These findings support the idea that top firms expand their national market share by opening establishments in new locations, thereby increasing local competition. 
20 Sep 13:28

State Migration Increasingly Driven by Taxes

by Veronique de Rugy

Americans move from one state to another for a variety of reasons. They move to retire, to find jobs, to lower their housing costs, or to enjoy nicer weather. While experts disagree about whether tax competition between states plays a large or small role in these relocation decisions, a new study finds that taxes are actually a factor for migration and will increase in importance as a result of the 2017 tax reform.

That new study on Tax Reform and Interstate Migration is from Chris Edwards, a tax expert at the Cato Institute. Using 2016 data from the Internal Revenue Service, he finds that 578,269 people moved, on net, from the 25 highest-tax states to the 25 lowest-tax states. That's a loss of $33 billion in aggregate income for these vacated states. In that year, 24 of the 25 highest-tax states suffered from net out-migration. The only high-tax state that saw in-migration was Maine.

No matter how one views and dissects the data, Edwards shows that state tax levels and net migration flows are highly correlated. The relationship is even more pronounced with households headed by a person age 65 or older and households with income higher than $200,000. It might not come as a surprise that some of the states both seniors and high earners are leaving are Alaska, Connecticut, California, Illinois, Maryland, New Jersey, New York, North Dakota, Pennsylvania, and West Virginia. The top 12 destinations for these taxpayers are Arizona, Colorado, Florida, Idaho, Montana, North Carolina, Nevada, Oregon, South Carolina, Tennessee, Utah, and Washington.

As Edwards rightly explains, the recent tax reform will make these trends even more potent. By limiting to $10,000 the amount of state and local taxes, or SALT, that people can deduct from their federal tax bill, many in high-tax states will feel the bite of their taxes more than they did before. High-income earners will be highly affected by the change since they use the deduction the most and deducted larger sums of money before the reform. This will increase their overall out-migration from the high-tax states where they may currently reside for the benefit of living in lower-tax states.

Another Cato study from 2016 called Freedom in the 50 States finds a strong correlation between migration and economic (fiscal and regulatory) freedom after controlling for climate and other variables. In other words, people tend to move to economically freer states. This makes sense since economic freedom tends to be a fairly good indicator of prosperity, as economists Chris Doucouliagos and Mehmet Ali Ulubasoglu showed in their review of 45 studies that analyzed the economic freedom-growth relationship. They concluded, "regardless of the sample of countries, the measure of economic freedom and the level of aggregation, there is a solid finding of a direct positive association between economic freedom and economic growth." More economic growth usually means more jobs, which are definitely an important factor in migration.

This, then, raises the question of why so many people still live in the least-free states like New York and California. The fact is that when it comes to where people choose to live, intrinsic characteristics of a state weigh heavily in the decision. Among the factors that keep people in less-than-free places are jobs, family, friends, and local amenities. In other words, there's a certain stickiness to states that have nothing to do with how free these places are.

There are times, however, when that stickiness is significantly reduced—for example, when a taxpayer is younger, or looking for a job and hasn't settled anywhere, or about to retire. In those cases, economic freedom tends to matter a lot. This explains why Florida—which is not a perfect libertarian heaven but has no income tax—is a top destination for retirees.

Edwards' study shows that tax competition between states is alive and well. Now imagine how much more potent this competition would be if the biggest tax bill we have to pay each year weren't the federal tax bill. The uncontrolled growth of the federal government tax bite, whether through the income tax, the payroll tax or both, has taken too much juice out of the competition between states. The SALT reform is helping restore some of it, which means that high-tax states better start providing better benefits to taxpayers at lower costs if they don't want to pay an even higher out-immigration price.

15 Sep 02:07

A Federal Court Just Limited Your First Amendment Right to Freely Associate

by Hans von Spakovsky

Should you be forced to disclose your charitable donations to the government?

Is it an invasion of your privacy and a violation of your First Amendment rights if the government requires nonprofit membership organizations that you join and contribute to—such as the NAACP, NARAL Pro-Choice America, the National Right to Life Committee, or Americans for Prosperity—to send your name to the government?

Unfortunately, a three-judge panel of the U.S. 9th Circuit Court of Appeals sees nothing wrong with such invasive mandates in a dubious decision that threatens the ability of Americans to support the causes and organizations they believe in that are an integral part of how our democracy works.

The 9th Circuit is going against the spirit of one of the most famous and important decisions of the Supreme Court during the height of the civil rights era, NAACP v. Alabama (1958).

On Sept. 11, in Americans for Prosperity v. Becerra, the 9th Circuit threw out an injunction issued by a district court and reinstated a California law that requires nonprofit organizations soliciting donations in the state to disclose to the state attorney general all of their members who have donated more than $5,000—regardless of whether they are even residents of California.

The plaintiffs, Americans for Prosperity Foundation and the Thomas More Law Center, were both found in violation of California’s mandatory disclosure provision.

Neither group had submitted a copy of its IRS Schedule B form (which lists all donors over $5,000) since 2001, but it was not until more than a decade later that they received a demand from then-state Attorney General Kamala Harris to file their disclosure forms.

Schedule B is not a public form. While it has to be filed with the IRS, it is not made available to the general public.

Many have questioned the right of the IRS to ask for such donor information, since it is not needed for tax purposes. In fact, the Trump administration has recognized that, and in July, the IRS announced that it will no longer require many nonprofits to file Schedule B forms.

In explaining that move, Treasury Secretary Steven Mnuchin said, “Americans shouldn’t be required to send the IRS information that it doesn’t need to effectively enforce our tax laws, and the IRS simply does not need tax returns with donor names and addresses to do its job.”

So why does the state of California need to know the identity of the donors to charitable organizations? What possible relevance does that have to regulating nonprofits?

The state argued that this information is necessary to enforce the law and protect the public from fraud. However, as the district court pointed out, the attorney general “was hard-pressed to find even a single witness who could corroborate the necessity of Schedule B forms in conjunction with their office’s investigations.”

The district court said that the only “logical explanation” for the fact that both organizations were listed as active charities in good standing for 10 years despite never filing a Schedule B form was that the attorney general had no actual need for the form.

In fact, the investigative unit of the state attorney general’s office confirmed “that auditors and attorneys seldom use Schedule B when auditing or investigating charities” and admitted that they did not need Schedule B forms in past instances in which they conducted successful audits that “found wrongdoing” by charities.

Additionally, once an investigation is underway, “the relevant information [Schedule B] contained could have been obtained from other sources.”

The plaintiffs argued that this disclosure requirement violated the rights of charities and donors to freedom of speech and freedom of association, and would create a chilling effect on donations and the willingness of individuals to be associated with the plaintiffs.

In today’s political climate—characterized by extreme polarization, as well as harassment and intimidation, especially in social media—if these forms become publicly available, then donors who contribute to politically incorrect causes could face significant backlash.

During the district court trial, the plaintiffs provided “ample evidence” that such events have occurred on multiple occasions, and have included death threats, assaults, and profane rants against officers of and contributors to Americans for Prosperity, as well as threatened boycotts of its donors.

These incidents are more than enough to deter potential donors, who may fear repercussions on their businesses and private lives if their donations are publicly disclosed.

That is why the Supreme Court struck down the state of Alabama’s attempt in 1958 in NAACP v. Alabama to force the NAACP to provide the state government with the names of its members and supporters.

The court said it was “beyond debate that freedom to engage in association for the advancement of beliefs and ideas is an inseparable aspect of the ‘liberty’ assured by the due process clause of the 14th Amendment, which embraces freedom of speech.”

Furthermore, it was obvious that associations such as the NAACP would see “diminished financial support and membership” if they were compelled to publicize the names of their supporters and members.

But how great is the risk that these forms filed in California will be disclosed to the public? According to the district court, the attorney general “has systematically failed to maintain the confidentiality of Schedule B forms.”

Despite overruling the district court, even the 9th Circuit conceded that 1,800 Schedule B forms were publicly available owing to being “misclassified as public over several years.” In fact, the district court found that “while human error can sometimes be unavoidable, the amount of careless mistakes made by the Attorney General’s Registry is shocking.”

Unfortunately, all of this evidence was, in essence, dismissed by the 9th Circuit when it overturned the district court and held that the plaintiffs had not shown this public-disclosure requirement was a “significant First Amendment burden” that would “chill contributions.”

It concluded that the requirement survived “exacting scrutiny” because “it is substantially related to an important state interest in policing charitable fraud,” despite the evidence showing these forms were barely ever used by the investigative unit of the attorney general’s office.

The 9th Circuit actually said it would uphold the requirement even if it was true that “contributors would face substantial harassment” in direct contravention of the Supreme Court’s decision in NAACP v. Alabama, even as it claimed that the evidence of harassment and economic reprisal here did not rise to the level of that shown in the NAACP case.

The almost willful ignorance by the 9th Circuit panel of the underlying facts in this case and the danger this requirement poses to basic rights is shocking.

It makes one wonder if the outcome would have been different if the challenge had been brought by two liberal organizations before this same panel of judges, all of whom were appointed by Democratic Presidents Bill Clinton or Barack Obama, as opposed to two conservative organizations, including one heavily supported by the Koch brothers, the current bete noire of the progressive left.

All Americans have a right to support causes they believe in, and they have a right to do so free from interference by the government. That includes not being forced by state governments such as California’s to have their activities reported, including their names, how much they contribute, and the organizations to whom they contribute.

What California is doing is not only unnecessary, it is a violation of fundamental First Amendment rights.

Would you donate to a nonprofit whose donors are reviewed by California’s attorney general, especially an extreme partisan such as Harris, now a Democratic senator from California, or current state Attorney General Xavier Becerra?

Would you donate to a nonprofit if your name could potentially be released to the public, making you subject to harassment, intimidation, and potential economic harm through your job or business?

This was a bad decision by the 9th Circuit that hopefully will be appealed and overturned.

The post A Federal Court Just Limited Your First Amendment Right to Freely Associate appeared first on The Daily Signal.

04 Sep 13:57

Details in BLS report suggest that most of the gender earnings gap is explained by age, marital status, children, hours worked - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

by Mark Perry

The Bureau of Labor Statistics (BLS) releases an annual report every year on the “Highlights of Women’s Earnings” (since the BLS report actually analyzes equally both men’s and women’s earnings, one might ask why the report isn’t simply titled more accurately “Highlights of Earnings in America”?). Here’s the opening paragraph from the most recent BLS report “Highlights of Women’s Earnings in 2017” that was released last month:

In 2017, women who were full-time wage and salary workers had median usual weekly earnings that were 81.8 percent of those of male full-time wage and salary workers. In 1979, the first year for which comparable earnings data are available, women’s earnings were 62 percent of men’s. Most of the growth in women’s earnings relative to men’s occurred in the 1980s and 1990s. Since 2004, the women’s-to-men’s earnings ratio has remained in the 80 to 83 percent range.

How do we explain the fact that women working full-time last year earned less than 82 cents for every dollar men earned according to the BLS? Here’s how the National Committee on Pay Equity (NCPE) explains it:

The wage gap exists, in part, because many women and people of color are still segregated into a few low-paying occupations. Part of the wage gap results from differences in education, experience or time in the workforce. But a significant portion cannot be explained by any of those factors; it is attributable to discrimination. In other words, certain jobs pay less because they are held by women and people of color.

Let’s investigate the claim that the gender pay gap is a result of discrimination by looking at some of the data on wages and hours worked by gender and by marital status and age in the BLS report for 2017:

1. Among full-time workers (those working 35 hours or more per week), men were more likely than women to work a greater number of hours (see Table 5).

a. For example, 25.1% of men working full-time worked 41 or more hours per week in 2017, compared to only 14.3% of women who worked those hours, meaning that men working full-time last year were nearly twice as likely as women to work 41 hours per work or more. 

b. Further, men working full-time were also 2.3 times more likely than women to work 60+ hour weeks: 5.8% of men worked 60 hours per week or more in 2017 compared to only 2.5% of women who worked those hours.

c. Also, women working full-time were about 2.5 times more likely than men to work shorter workweeks of 35 to 39 hours per week: 10.9% of full-time women worked those hours in 2017, compared to only 4.3% of men who did so.

What’s especially interesting is that women working 35-39 hours per week last year earned 107% of men’s earnings for those weekly hours, i.e., there was a 7% gender earnings gap in favor of female workers for that cohort. Using the standard political and gender rhetoric of groups like the National Committee on Pay Equity, couldn’t that earnings premium for women be mostly explained by gender discrimination against men in the labor market for employees working 35-39 hours per week? That is, to be consistent shouldn’t the claim here be that “certain jobs pay less because they are held by men”?

2. Although not reported by the BLS, I can estimate using its data that the average workweek for full-time workers last year was 41.5 hours for women and 43.2 hours for men. Therefore, the average man employed full-time worked nearly 2 more hours per week (1.70 hours) in 2017 compared to the average woman, which totals to an average of an additional 85 male work hours per year compared to the average full-time female worker.

Comment: Because men work more hours on average than women, some of the raw wage gap naturally disappears just by simply controlling for the number of hours worked per week, an important factor not even mentioned by groups like the National Committee on Pay Equity. For example, women earned 81.8% of median male earnings for all workers working 35 hours per week or more, for a raw, unadjusted pay gap of 18.2% for all full-time workers. But for those workers with a 40-hour workweek (about three-quarters of all full-time female workers), women earned 88.2% of median male earnings, for a pay gap of only 11.8% (see chart). Therefore, once we control only for one variable – hours worked – and compare men and women both working 40-hours per week in 2017, more than one-third of the raw 18.2% pay gap reported by the BLS disappears.

3. The BLS also reports in Table 1 that for young workers ages 16-24 years, women earned 91.2% of the median earnings of their male counterparts working full-time reflecting an 8.8% gender earnings gap for that age cohort last year. Once again, controlling for just a single important variable – age – we find that more than half of the overall unadjusted raw earnings gap for all workers (18.2%) disappears for young workers.

4. The BLS reports that for full-time single workers who have never married, women earned 91.3% of men’s earnings in 2017, which is an earnings gap of only 8.7% (see Table 1 and chart above), compared to an overall unadjusted pay gap of 18.2% for workers in that group. When controlling for marital status and comparing the earnings of unmarried men and unmarried women, more than half (52.2%) of the raw 18.2% earnings gap is explained by just one variable (among many): marital status.

5. In Table 7, the BLS reports that for full-time single workers with no children under 18 years old at home (includes never married, divorced, separated, and widowed), women’s median weekly earnings of $717 were 94.2% of the weekly earnings of $761 for their male counterparts in that cohort (see chart above). For this group, once you control for marital status and children at home, we can explain more than two-thirds of the unadjusted gender earnings gap (6.81% vs. 18.2% unadjusted).

6. From Table 1 in the BLS report, we find that for married workers with a spouse present, women working full-time earned only 78.5% of what married men with a spouse present earned working full-time in 2017 (see chart). Therefore, BLS data show that marriage has a significant and negative effect on women’s earnings relative to men’s, but we can realistically assume that marriage is a voluntary lifestyle choice, and it’s that personal decision, not necessarily labor market discrimination, that contributes to at least some of the gender earnings gap for married full-time workers with a spouse present.

7. Also from Table 7, married women (with spouse present) working full-time with children under 18 years at home earned 79.2% of what married men (spouse present) earned working full-time with children under 18 years (see chart). Once again, we find that marriage and motherhood have a significantly negative effect on women’s earnings; but those lower earnings don’t necessarily result from labor market discrimination, they more likely result from personal family choices about careers, family friendly and flexible workplaces, commute time, child care, and the number of hours worked, etc.

Bottom Line: When the BLS reports that women working full-time in 2017 earned 81.8% of what men earned working full-time, that is very much different from saying that women earned 81.8% of what men earned for doing exactly the same work while working the exact same number of hours in the same occupation, with exactly the same educational background and exactly the same years of continuous, uninterrupted work experience. As shown above, once we start controlling individually for the many relevant factors that affect earnings, e.g. hours worked, age, marital status, and having children, most of the raw earnings differential disappears. In a more comprehensive study that controlled for all of the relevant variables simultaneously, we would likely find that those variables would account for nearly 100% of the unadjusted, raw earnings differential of 18.2% for women’s earnings compared to men as reported by the BLS. Discrimination, to the extent that it does exist, would likely account for a very small portion of the raw 18.1% gender earnings gap.

For example, a comprehensive 2009 study from the Department of Labor (“An Analysis of Reasons for the Disparity in Wages Between Men and Women”) came to the following conclusion (emphasis added):

This study leads to the unambiguous conclusion that the differences in the compensation of men and women are the result of a multitude of factors and that the raw wage gap should not be used as the basis to justify corrective action. Indeed, there may be nothing to correct. The differences in raw wages may be almost entirely the result of the individual choices being made by both male and female workers.

Final thought: Consider these definitions:

Wage: A payment of money for labor or services usually according to contract and paid on an hourly, daily, or piecework basis.

Earnings: Money obtained in return for labor or services.

Using the definition of “wage” above, the claim of a “gender wage gap” implies for many (like the NCPE) that women are paid lower hourly or daily wages than men when they are working side-by-side for the same company doing the exact same job with the same educational and work backgrounds.

Language and words are important. And that’s why I think it’s important and more accurate to refer to a “gender earnings gap” rather than a “gender pay gap” or “gender wage gap.” Note that the NCPE uses the terms “gender wage gap” and “wage gap” 12 times on just the Q&A page of its website and more than 20 times on its main website. The Department of Labor study also used the term “raw wage gap.” The underlying assumption with that language (“gender wage gap”) is that there is one hourly (or weekly or monthly) wage paid to men and a lower hourly (or weekly or monthly) wage paid to women working side-by-side their male counterparts doing the exact same job when both have the exact same educational and work backgrounds, etc.

Switching to using the term “gender earnings gap” broadens the concept of earnings differentials by gender, and more accurately allows for the reality that women are usually making the same hourly (or weekly) wage as men doing the exact same job. But men often “earn” more on average than women because men are working longer hours on average, performing different jobs than women, working in jobs that are physically more rigorous (construction), working in jobs that are more dangerous (logging) and in more hostile work environments (oil rigs workers), involve longer commute times and may be less flexible and less family friendly. So I think it’s time to completely scrap the term “gender wage gap” and replace it with the more accurate “gender earnings gap.” Unfortunately, a Google search reveals that are more than 23 times more results for the term “gender wage gap” (984,000 results) that for “gender earnings gap” (42,100).

 

 

02 Sep 15:00

Witch hunts in the Western world, past and present

by Leeson
President Trump frequently refers to Special Counsel Robert Mueller’s investigation into possible Russian collusion during the 2016 presidential election as a 'witch hunt'. This column argues that competition might be behind both this current ‘witch hunt’ and Europe’s ‘witch craze’, which between 1520 and 1700 claimed the lives at least 40,000 people. Today it is competition between Democrats and Republicans; in 16th and 17th century Europe, it was competition between Catholicism and Protestantism in post-Reformation Christendom.
26 Aug 12:11

The Dangers of Ignoring Cognitive Inequality

by Wael Taji

On Sunday 28 April 1996, Martin Bryant was awoken by his alarm at 6am. He said goodbye to his girlfriend as she left the house, ate some breakfast, and set the burglar alarm before leaving his Hobart residence, as usual. He stopped briefly to purchase a coffee in the small town of Forcett, where he asked the cashier to “boil the kettle less time.” He then drove to the nearby town of Port Arthur, originally a colonial-era convict settlement populated only by a few hundred people. It was here that Bryant would go on to use the two rifles and a shotgun stashed inside a sports bag on the passenger seat of his car to perpetrate the worst massacre in modern Australian history. By the time it was over, 35 people were dead and a further 23 were left wounded.

Astoundingly, Bryant was caught alive. He was arrested fleeing a fire at the house into which he had barricaded himself during a shootout with the police. He later pled guilty to a list of charges described as “unprecedented” by the standing judge, and was sentenced to life in prison without the possibility of parole, thus sparing his victims and other survivors the suffering (and perhaps the catharsis) of a protracted trial. Yet, in spite of his guilty plea, Bryant did not take the opportunity provided by his official statement to offer any motive for his atrocities. Instead, he joked “I’m sure you’ll find the person who caused all this,” before mouthing the word ‘me.’ Intense media speculation followed, the main focus of which was Bryant’s history of behavioral difficulties. These were offered as possible evidence of a psychiatric disorder such as schizophrenia (which would have been far from sufficient to serve as a causal explanation for his crimes). However, the most notable and concrete fact of Bryant’s psychological condition was his extremely low IQ of 66—well within the range for mental disability.

Lascar Monument to Port Arthur massacre (wikicommons)

IQ scores are classified in a number of ways, all of which are broadly similar. The Wechsler Adult Intelligence Scale (WAIS-IV) establishes seven categories of IQ scores. Most of us fall into the ‘Average’ band, constituted by the 90-109 range. Those achieving scores of 130 or higher are considered ‘Very Superior.’ Conversely, scores of 69 and under are classified as ‘Extremely Low,’ and automatically qualify the scorer for a diagnosis of ‘mild retardation’ according to the APA’s Diagnostic and Statistical Manual of Mental Disorders. It is into this band that Bryant’s score falls.

The connection between intelligence and behavioral problems, such as Conduct Disorder (CD) or Antisocial Personality Disorder (APD), was well-known around the time of the Port Arthur Massacre. A review by biostatistician and UCSD professor Sonia Jain cites contemporaneous studies to suggest that low IQ scores in childhood should be considered a risk factor for APD and CD. In 2010, several psychologists published results from a longitudinal study containing data on over a million Swedish men, who were tracked from conscription for a little over 20 years. They found that IQ scores tested during conscription were a significant and robust predictor, not only for APD or CD, but for all categories of mental disorders. Conscripts with low IQ were substantially more likely to be diagnosed with one or more mental disorders, to suffer from mood and personality disorders, and to be hospitalized for mental illness. Those in the lowest band—like Bryant—were most at risk of severe psychological disorders.

a & b: Hazard ratios for admission for different categories of psychiatric disorder according to nine-point IQ scale. Highest IQ score (coded as 9) is the reference group. Estimates are adjusted for age at conscription, birth year, conscription testing centre, parental age and parental socioconomic status. (n=1,049,663)

While these correlations are concerning, they do not offer an explanation for Bryant’s atrocities. In a population where intelligence is normally distributed with a mean of 100, a little over two percent of people would attain IQ scores close to Bryant. A further 15 percent would receive IQ scores somewhere below 84—well beyond the threshold for disqualification in the Armed Forces Qualification Test (AFQT), used to determine suitability for admission into the US Army until 1980. Careers for those below this level are extremely rare—a fact that might help explain the correlation between low IQ and an enhanced risk of criminal offending, given the scarcity of well-paid jobs for those with an IQ of below 84. 

But much of this correlation is due to street-level petty and violent offenses, not mass murder, and it would be abhorrent—obscene, even—to suggest that people with a low IQ should be treated with suspicion, or as murderers-in-waiting. In almost all cases, these individuals pose a risk to no one but themselves, and are more likely to fall prey to victimization by others. On the other hand, it is equally irresponsible to ignore the specific difficulties which those with a low IQ face. The consequences of this wishful thinking—however noble in intent—can be devastating.

Perhaps the best example is offered by the recent history of the Cold War. While the American military-industrial complex was sufficiently sophisticated to provide the United States with all the arms and armaments it could possibly hope for, there are always things that money cannot buy. In this case, it was bodies—young American men needed to fight on the ground in 1960s-era Vietnam, where they found the most unforgiving of battlefields among the region’s unassuming jungles and innocuous rice paddies. The unusually high attrition rate of soldiers posted there, as well as the frequent use of student deferments or feigned illness to dodge the draft (President Trump’s excuse of ‘temporary bone spurs’ constitutes one particularly famous example), resulted in a shortage of men which meant that more troops were needed than the nation was able to supply.

The government was confounded by this problem for some time, attempting halfhearted crackdowns on draft dodgers as a temporary solution, until Secretary of Defense Robert McNamara arrived at a more permanent workaround. The US government would draft men whose low IQ scores had hitherto disqualified them from military service. This stratagem—codenamed ‘Project 100,000’—is detailed along with its dreadful consequences in the book McNamara’s Folly by the late Hamilton Gregory. Gregory witnessed the fate of the low-IQ draftees firsthand while he was a soldier in Vietnam. These draftees—cruelly nicknamed ‘McNamara’s Morons’—were generally capable of completing simple tasks, but even a simple task imperfectly executed can be disastrous in warfare.

US Secretary of Defense Robert McNamara at a press conference on Vietnam (26 April, 1965)

A case study in the book is ‘Jerry’ (not his real name). Jerry was a draftee from the 100,000 who had been assigned guard duty in a camp by the Quan Loi Green Line. Jerry’s task was to challenge anyone approaching the camp by calling: “Halt! Who goes there?” followed by “Advance and be recognized!” once a response had been obtained. This task was minimally demanding due to the clearly visible differences between an American soldier and the average Vietcong guerrilla. But when a well-liked American officer returned to camp, Jerry bungled his instructions. Upon seeing the officer approaching, he yelled “Halt!” and then opened fire, killing the man where he stood. Jerry subsequently disappeared in what was either an act of remorseful abscondence or murder by outraged members of his battalion. In another case described by Gregory, one of the ‘morons’ played a joke on his squadmates by throwing a disarmed hand grenade at them. Despite being beaten up for it, he found this prank so amusing that he repeated it every day until the inevitable happened; he forgot to disarm the grenade, causing the deaths of two soldiers and the grievous wounding of several more.

What happened to many of the 100,000 (whose actual total exceeded 350,000) is not hard to predict. “To survive in combat you had to be smart,” Gregory writes. “You had to know how to use your rifle effectively and keep it clean and operable, how to navigate through jungles and rice paddies without alerting the enemy, and how to communicate and cooperate with other members of your team.” Fulfilling all or any one of these minimum requirements for survival in a battlefield is contingent upon a certain level of verbal and visuospatial intelligence, which many of McNamara’s draftees did not possess. This ultimately led to their fatality rate in Vietnam exceeding that of other GIs by a factor of three.

The danger of physical harm faced by those with a low IQ is not restricted to the battlefield. A 2016 study by four psychologists using data from the Danish Conscription Database (containing 728,160 men) revealed low IQ to be a risk factor for almost all causes of death. A drop in IQ by a single standard deviation (roughly 15 points) was associated with a 28 percent increase in mortality risk. The association between low IQ and mortality was particularly great for homicide and respiratory disease (such as lung cancer). The high homicide rate could reflect a predisposition for those of low IQ to find themselves in dangerous situations, perhaps due to a lack of economic opportunity or an increased likelihood of being victimized by predatory individuals. Similar features could explain the prevalence of respiratory disease, which may be a product of high rates of smoking as well as a greater likelihood of inhabiting more polluted industrial areas where it’s easier to find low-skilled work. Clearly, being born with a low IQ is sufficient to set one up for an unlucky and unhappy life. But could low IQ have contributed to—not explain, but be a factor in—the massacre committed by Martin Bryant?

To answer this question, we have to transcend mere correlations between IQ and different types of outcome, and consider that those with low IQ are much more likely to experience misfortune in seemingly every endeavor. Having intelligence is what allows us to operate in the world—both on our own, and within the societies we inhabit. Those lucky enough to have a high IQ have an easier time at dispatching the various challenges they face, and thus naturally rise within hierarchies of competence. We can imagine any number of these hierarchies, most of which are unimportant (the hierarchy of Rubik’s Cube solvency speed, for example, is probably irrelevant), but all of which require some degree of intelligence. Furthermore, some of these areas of success—such as friendship groups, romantic relationships, and professional employment—are so fundamental to the individual pursuit of happiness that to be unable to progress in them is profoundly damaging to one’s sense of well-being and intrinsic self-worth.

This means that having a low IQ doesn’t only make you more likely to get killed or fall victim to an accident. It also means you’re more likely to undergo difficulties in progressing up every ladder in life. You’ll often feel permanently ‘stuck at zero’—unable to improve or change your position. Most of us will experience this feeling at least a few times in our lives, whether encountered in school (being unable to break the ‘A-grade’), in our social lives (being unable to establish or maintain a successful romantic relationship), or in comparatively trivial areas. Yet most of the time, it is transient—passing when we switch our efforts to a new endeavor, or after devising a way to solve the problem. Very few of us know what it is like to have that feeling almost all of the time—to have a large proportion of one’s attempts at self-betterment or advancement frustrated by forces that seem to be beyond our control. Being trapped in such a dismal psychological state for only a brief interval can lead to anxiety, depression, or dependence. In some, this feeling of ‘being stuck at zero’ (that the world is manifestly unfair and against them) will lead to resentment—and resentment can turn into murderousness.

Martin Bryant’s life, characterized by loneliness, depression, and numerous frustrated attempts at making friends, is replete with examples that follow this pattern. Clearly, his actions mark him as an extreme outlier among those with low IQ—but his troubled life experiences are distressingly representative. Four in 30 children in classrooms across America are made to compete with their peers for grades and university places in spite of low IQ and with little success. And, like them, Bryant found society’s ‘normal’ to be simply unobtainable. Because the role of cognitive ability is de-emphasized in childhood success, and often treated as a function of effort, children in these circumstances can find themselves trying harder than every other child in the classroom, while still being admonished to ‘try harder.’ While wise caregivers abstain from blaming these children outright for their failures, a taboo on acknowledging the importance of intelligence means that low IQ individuals themselves may be unaware of their condition or its full ramifications, making them likely to engage in repeated self-blaming injurious to self-esteem and mental stability.

None of this is to suggest that those with low IQ, or those who experience a duration of being ‘stuck’ due to their cognitive limitations, should be viewed as likely to break the law or engage in violent crime. But it’s one possible explanation for the fact that those with a low IQ are more likely to do so than those with an average or high IQ. And the uncomfortable reality is that the resentful, in this case, are somewhat correct in their analysis—they have been set up in a game rigged against them from the very start. Recent research in genomics has confirmed this: a 2018 study in Nature1 used genes sequenced from over a million individuals to examine the genetic contributions to educational attainment. This process allows for the construction of profiles for individual ability by evaluating polygenic scores (PGS). In this study, those within the highest PGS quintile had around a 50 percent likelihood of graduating from college; those in the lowest bracket, only 10 percent. Yet none of this difference in ‘genetic quality’ can be accounted for by individual merit or achievement. It is a difference of crucial importance, yet it is determined for us as individuals by luck alone.

Polygenic Scores from the Nature study (2018)

While generous welfare systems in Western countries do provide benefits to those most disadvantaged by the cognitive lottery, a much larger proportion do not qualify for any assistance at all. Instead, those with IQs below 84 are often forced to work arduous manual labor jobs, since they are unlikely to possess the array of qualifications required for non-manual work. These occupations make them the most marginalized in our complex capitalist society—and even those employment opportunities are shrinking under the unrelenting pressure for lower costs and greater efficiency. Job categories like driver, cleaner, and assembly line worker are rapidly disappearing due to automation, leaving those with low IQ nowhere else to go. While most of us delight at the luxurious comforts heralded by the ongoing automation revolution, these same comforts—such as self-driving cars, autonomous vacuum cleaners, and robotized assembly lines—are poised to render a cognitively vulnerable 15 percent of the population unemployed and unemployable.

What exactly are we doing to rectify or alleviate cognitive inequality? The answer, of course, is that we ignore it and hope it will go away. Continuing to force large numbers of cognitively underprivileged children through the arduous challenges of the standard education system is only perpetuating the devastating legacy of intelligence denialism. By pretending away the fact of IQ differences, McNamara drafted the intellectually challenged into a warzone more challenging and lethal than anything they would have faced at home and thereby caused the needless deaths of thousands. Furthermore, his initiative left tens of thousands of survivors with debilitating psychological conditions such as post-traumatic stress disorder and cruelly deprived many thousands of parents and relatives of the chance to see a beloved family member grow old. The apparent fair-mindedness in this act of conservative blank-slatism is belied by its atrocious outcomes, which render it morally indefensible.

Yet while McNamara’s policy has been called “a crime against the mentally disabled,” few have considered what crime might be constituted by our indifference to the cognitively underprivileged within our own societies. Fifty years after McNamara and 20 years after Martin Bryant, we have not yet begun to ask the question: is it really fair for one person to be born with an intellectual assurance of success in navigating the challenges of a twenty-first century society, while another is born almost certain to fail? Until we accept that people with low IQ exist, and that the ramifications of their condition are indeed severe, how can we even begin to discuss what might be done to alleviate their suffering? The importance of cognitive ability for life success in our technologically complex society makes answering that question a moral imperative—but economic and political leaders have shown scant interest in this issue. Despite the fact that low IQ is correlated with negative outcomes in a large number of areas and afflicts around 15 percent of the population, we seem incapable of treating it like any other public health problem.

Simply wishing away the fact that the genetic and environmental circumstances of a person’s birth inevitably endows everyone—for better or worse—with a personality, a level of sociability, and an intelligence is a form of denialism that serves only our urge for moral exculpation. Pretending that those burdened with low IQ are just lazy, or lack the appropriate motivation, is a way of absolving ourselves of responsibility to help them. Accepting that intelligence exists, that intelligence matters, and that the less intelligent are equal to us in moral worth and value and thus ought to be helped, constitute the first steps in addressing this increasingly urgent need to fully accommodate the cognitively underprivileged.

 

Wael Taji is the penname of a predoctoral student and intelligence researcher working in behavioral economics and neuroscience at Peking University. His first publication, “China’s Urban-Rural Cognitive Divide: Evidence from a Longitudinal Cohort Study,” is currently under review at the journal Intelligence, published by Elsevier. You can follow him on Twitter @coevolutionist

Reference:
1 Gene Discovery and Polygenic Prediction from a Genome-Wide Association Study of Educational Attainment in 1.1 Million Individuals by James J. Lee et al, Nature 

The post The Dangers of Ignoring Cognitive Inequality appeared first on Quillette.

04 Aug 12:59

Swedish Exceptionalism Hits a Wall

by Dan

The “Swedish model” is popular among many members of the American Left, who see a progressive heaven: a healthy social democracy that combines a strong economy with an all-encompassing welfare state. But that image is dated. Sweden today is angry. In its upcoming September elections, the anti-immigration Sweden Democrats party could well become the largest political force in the country as the political establishment whistles past the graveyard.

The model’s bubble burst in 2015, when Sweden took in more than 160,000 asylum seekers—nearly 2 percent of the population. By November of that year, Green Party leader and Deputy Prime Minister Åsa Romson—the leading advocate of open borders—announced, unable to hold her tears back, that Sweden’s borders would now be closed. There was no more space.

Immigration is only part of the problem: For years, core elements of the state showed evidence of significant dysfunction. After the 180-degree turn in immigration policy, normally deferential Swedish voters suddenly began questioning their political class as never before. Once begun, the public’s willingness to obey their thought police in government and media dissipated rapidly; it was as though a magic spell of some sort had been broken. Since then, Swedes have begun to remake their country’s politics, and there is now no going back. But exactly what lies ahead is not yet clear.

The Rise of Swedish Exceptionalism

To understand how Sweden got to this point requires a short review of Swedish exceptionalism: how Sweden’s elites convinced themselves, and their population, that their country is more moral and righteous than the rest of the world.

Sweden used to be a poor country: In the 1860s, it experienced one of the last great famines in Europe, which among other factors triggered massive emigration to North America. Yet by 1900, Sweden had recovered and began to build what would become an immensely successful economy. An advantageous geographic location and political leaders that kept the country out of two world wars certainly helped. But so did a market economy, a homogenous population where farmers had been free and never experienced feudalism, and an ensuing culture of consensus that rendered society peaceful and orderly. Sweden spawned industries that figured among the world’s leading brands: Which other country of just seven million in 1960 could boast brands like Volvo, Saab, Ericsson, Electrolux, or IKEA, and build its own fighter jets?

The economic boom was remarkable. From the turn of the 20th century to the 1970s, Sweden’s GDP grew by an average of 2.4 percent—compared to less than 2 percent for the United States and Western Europe. Sweden’s GDP per capita soared from the global average in 1850 to double the average by 1930 and triple in 1965.

This export-fueled growth occurred in a peculiar political setting: From 1928 to 1991, Sweden was ruled by a single political party—the Social Democrats—for all but six years. This single-party rule presided over a corporatist state that was extremely friendly to large corporations, while building a cradle-to-grave welfare system on the back of very high levels of taxation. This stifled small business and entrepreneurship, but that mattered little as long as big industry and government provided sufficient employment for the population.

The Social Democratic “Swedish model” became in effect a hegemonic state ideology: a third, allegedly morally superior path in opposition to both Soviet-style communism and American-style capitalism. With this came a public rejection of all political or military alliances with a view to maintaining neutrality in wartime. In private, Sweden’s Social Democrats—who in the interwar period had taken a clear stance against communism—threw their lot in with the West, including far-reaching covert defense planning with NATO. But only a select few in the country’s military and political leadership knew this; the population at large, and the left-wing grassroots, did not.

Following the events of 1968, the Swedish Left became mesmerized by an increasingly intense Left-radical ideology that embraced Third World leftist revolutionaries, and identified the United States, NATO, and Israel as the enemy. During the 1970s, this powerful leftist wave took over much of the Social Democrat Party, the bureaucracy, and even the Lutheran State Church. Cooler heads ensured they never gained influence over finance and the economy, but they became dominant in foreign policy and particularly foreign assistance. During the long tenure of the charismatic Olof Palme, Sweden’s foreign policy became increasingly focused on supporting leftist causes. The growing aid budget largely went toward left-wing regimes, in particular the “African socialism” experiment in Tanzania, for which Sweden provided a whopping US$7 billion. As the late Per Ahlmark has documented, the Swedish Left fawned over all sorts of left-wing demagogues and tyrants. While Palme compared American bombings in Vietnam to Nazi Germany, during the 1970s and 1980s his government championed left-wing “liberation movements” across Latin America, Africa, and Asia. During a visit to Cuba in 1975 Palme hailed Castro’s revolution; in 1984, he was the first European leader to visit Nicaragua’s Sandinistas.

The extent and depth of the ideological zeal that gripped Sweden for a generation can hardly be overstated. In the 1970s, many young leftists like Birgitta Dahl publicly defended Cambodia’s genocidal Khmer Rouge regime, and rejected allegations of their mass murder as “lies.” Dahl rose to become Speaker of Parliament in 1994, without having to recant. Pierre Schori, a life-long advocate for communist dictators like Castro and the Sandinistas, was elevated to Deputy Foreign Minister and then Development Minister. Crucially, whereas Swedish Social Democrats had been ardent supporters of Israel in the past, in the 1970s they turned against Israel and embraced Yasser Arafat long before he publicly renounced terrorism.

The end of the Cold War only temporarily slowed this left-wing juggernaut. The Swedish Left quickly reinvented itself by embracing the postmodern causes of the New Left and repackaging itself accordingly. It now presented itself as a world champion of globalism. It had embraced “New Left” issues such as feminism and environmentalism already in the 1970s, but now expanded and fortified them with postmodern and postcolonial theorizing. At home, the Social Democrats determined that Sweden suffered from “structural discrimination,” was essentially a racist society suffused with deeply ingrained prejudices against “the other,” and had to be transformed from above by policies that counteracted all real or supposed manifestations of “white privilege.” A growing element was climate alarmism: Hardly a day goes by without dire warnings of impending doom unless Swedes, who are responsible for about 0.2 percent of world carbon emissions, radically change their lifestyle.

The prevailing ideology also led Sweden to adopt one of the world’s most liberal immigration policies. The number of people granted residence permits grew exponentially, the yearly average climbing from 20,000 a year in the 1980s to 40,000 in the 1990s and 70,000 in the 2000s. Between 2010 and 2015, the average hit 110,000: more than 1 percent of the country’s population each year, exceeding the peak of U.S. immigration over a century ago. Between 1995 and 2017, Sweden took in more than 1.8 million people. Meanwhile, the country’s leftist establishment in government and media branded as “racist” anyone daring to use the term “volumes” when speaking of immigration policy. The Left’s media dominance is palpable: Polls have showed that over half of print journalists, and two thirds of those in state TV and radio, sympathize with the Green or Left parties, which have never achieved a combined vote of more than 16 percent.

While the globalist agenda was driven by the Left, the center-right gradually accommodated to its rhetoric. Indeed, Fredrik Reinfeldt, who took over as leader of the supposedly conservative Moderate Party in 2003, gained power in 2006 largely be realigning the party with prevailing dogma. He slashed defense budgets and labeled national defense a “special interest,” while memorably stating that “only barbarism is genuinely Swedish. All development has come from abroad.” When the anti-immigration Sweden Democrats were first elected to parliament in 2010, Reinfeldt reacted by concluding an immigration pact with the Green Party to further liberalize immigration. His explicit purpose was to show that a vote for the Sweden Democrats would not cause him to change policies.

Key to the dominant leftist dogma has been to divide people into oppressor and oppressed groups. In the spirit of this “intersectionality,” the Swedish Left at home and abroad embraced Islamists because they claim to represent oppressed Muslims. The driving force has been the Social Democrats’ influential religious organization, which in a formal agreement with the Muslim Brotherhood-controlled Swedish Muslim Council pledged to secure political representation for Swedish Muslims—or rather, their self-proclaimed representatives. In 2013, the Social Democrats elected Omar Mustafa, leader of the Brotherhood-aligned Islamic Association in Sweden, to its party board—only to backtrack following reports of his connections to anti-Semitic and anti-gay statements. The Green Party has similarly been embroiled in Islamists scandals: In 2016, Housing Minister Mehmet Kaplan was forced to resign over connections to Turkish far Right and Islamists, and a candidate to the party board was forced to withdraw after his refusal to shake women’s hands caused a furor.

The confusion of the Swedish Left as its simultaneous embrace of feminism and Islamism clashed with one another would be amusing if the consequences were not so dire. Left-wing anti-Semitism has grown rapidly in the country, often bolstered by immigrants from the Middle East. The Swedish Left has been remarkably reluctant to deal with the problem in its own ranks. And in foreign policy, this romance with Islamism helps explain the harshly anti-Israel positions that have characterized Swedish foreign policy in recent years.

Trouble in Paradise

Left-wing elites gained firm control over agenda setting, which they exercised through Sweden’s media and political landscape. But as pollster Markus Uvell has detailed, this agenda did not correspond to the views of most Swedes, surprising numbers of whom espouse conservative views. How, then, did the Left succeed?

Swedes as a whole differ from Americans with their contentious civic associations and raucous debate. By contrast, Swedes are reluctant to speak out against a perceived consensus, which they tend to follow—until it fractures. In recent times, this phenomenon has been named the “opinion corridor”: a society with a very narrow space of acceptable political speech, with everything outside considered beyond the pale and leading to the exclusion or banishment of the perpetrator. In this sense, Swedish society as a whole could be likened to a liberal U.S. college campus, where views challenging the dominant Left-liberal ideology are voiced only at one’s own peril.

But reality has a tendency eventually to break even the most rigid dogmas. In Sweden the reality that ate away at the national fantasy was the gradual decay of four core functions of the state: education, health, public order, and defense. All the dominant parties were complicit in this failure: the Social Democrats who ruled from 1994 to 2006, Reinfeldt’s center-Right coalition that ruled until 2014, and particularly the Left-Green coalition in power since then. It stems from a combination of mismanagement, opportunism, and political correctness, exacerbated by the massive challenge posed by large-scale immigration. Leftist ideology played a key role in this. But mishandled privatization efforts played their part, too, as did fads in public administration, such as New Public Management theories, which imposed enormous administrative and reporting requirements on public service providers.

Sweden’s defense was long based on a healthy deterrent force. But after 1989 Swedish politicians surpassed their counterparts elsewhere in Europe in concluding that national defense was anachronistic in the new and peaceful era they believed to be emerging. Defense spending is headed toward less than 1 percent of GDP.  By 2013, the Chief of Sweden’s General Staff announced that if faced with a foreign invasion, Sweden had the capacity to defend itself only for one week. It was in response to this sober assessment that Prime Minister Reinfeldt angrily dismissed defense and everyone connected with it as merely a “special interest.”

As for education, the Swedish public school system became a kind of guinea pig for the social experiments conjured up by the 1968 generation. Grades and report cards were banned until the eighth grade. Schools came to focus on social skills and “values” rather than knowledge. The authority of teachers was downgraded, so that they can no longer discipline students. Classrooms are notoriously chaotic, with students chatting, playing, and spending time on their smartphones. A firm selling hearing protection now actively markets its products to teachers and children with brands like “Silenta” and “Coolkids,” which motivated students use because it is the only way to shut out the noise and concentrate on learning.

Meanwhile, new public administration practices have imposed huge administrative and reporting requirements on teachers, while their pay in real terms shrunk to under $40,000 per year. Teachers burn out and quit at an alarming rate, while schools are unable to recruit replacements. By 2022 the country will need 77,000 new teachers, but they are nowhere to be found. The impact on test results has been predictable, with Sweden sinking like a stone in the Program for International Student Assessment rankings. In 2003, Sweden was above average in reading, math, and science; by 2012, it was below average in all three. The downward trend was halted by 2015, but Swedish schools are far below the performance of their counterparts in neighboring countries.

Generous and high-quality healthcare has been another signature of the “Swedish model.” Sweden’s medical system does continue to deliver high-quality treatment—the problem is getting access to it. To reduce wait times, the government guarantees that patients see a primary care doctor within seven days, a specialist within ninety days, and receive surgery or other action within another ninety days. These are among the longest waiting times in all Europe, but even these goals are not being met. The National Healthcare Board in 2018 concluded that health providers fail to meet this timetable in more than 25 percent of cases.

Politicians respond by pouring money into the healthcare system. But the problem is not money: Sweden ranks fourth in the OECD on healthcare spending. The average German doctor treats over 2,400 patients per year, but in Sweden the number is under 700. Swedish doctors, again because of mismanagement and the quest for quantifiable reporting, spend so much of their time doing paperwork that they have less time to see patients. Meanwhile, real salaries in healthcare have plummeted. Specialist doctors receive half the salary of their counterparts in France or Britain; nurses earn so little and have such heavy workloads that group resignations are now commonplace. Sweden now has the lowest hospital bed capacity per capita in Europe, at 2.4 per thousand, compared to an EU average of 5.1.

Law and order is the last core area of state decline. Sweden has always prided itself on being a safe country, but things have decisively changed. Most dramatic is the unrelenting rise in gang crime, including deadly shootings, in Swedish cities. Gang criminals regularly target each other in public places in broad daylight, and they increasingly issue threats or take action against law enforcement officials. Swedish women, in particular, express growing concerns about crime, making it the top issue ahead of the September 2018 elections. A third of women now report fearing violence in the vicinity of their homes at night.

When critics of immigration point out the massive over-representation of immigrants and asylum seekers in crime statistics, they step on a hornet’s nest of political correctness. Meanwhile, like teachers and doctors, policemen are mired in paperwork and are quitting in droves. A thousand officers have left the capital region alone in recent times, leaving only 1,300 officers for a metropolitan area of 2.2 million. The result: the percentage of crimes that are ever solved is plummeting. Less than 4 percent of burglaries and 12 percent of assaults were resolved in 2015. Unsurprisingly, alternative and social media are rife with anger and frustration over the breakdown of law and order.

These facts, and the proliferation of social media, lend themselves to exaggeration. Some Swedish populists, as well as Russian news channels like RT and Sputnik, regularly portray Sweden as being on the brink of total collapse. This, of course, is nonsense. But it does feed the rise of violent right-wing extremists who seek to capitalize on the anger in the population.

It is against this background that the dominant dogma began to slip. As Uvell details, a growing rift is now opened between what politicians have said and what regular people have seen in their daily lives. Some 74 percent of Swedes, he reports, agree that politicians “focus too much on odd symbolic issues rather than things that matter in citizens’ life.” The decline of the public services created a powerful disconnect precisely because Swedes had been led to think of themselves as constituting the world’s most perfect society. When it became clear that this was no longer the case, and Swedes saw their country ranked with poorer southern European countries in category after category, the traditional Swedish deference to authority began to crack. As it did, the anti-establishment Sweden Democrats rose to take advantage.

The Rise of the Sweden Democrats

The rise of the Sweden Democrats has been dramatic. In 2010 it gained representation in parliament with less than 6 percent of the vote. Today, polling data predict that it has a realistic shot of becoming the country’s largest party. But unlike the Norwegian Progress Party and the Danish People’s Party, and more like France’s National Front, the Sweden Democrats have nasty roots. When formed in 1988, its leadership included many skinheads and Nazi sympathizers. But by the mid-1990s, a new generation of leaders began to clean the party up—particularly after a “gang of four,” led by the 26-year old Jimmie Åkesson, took over the party in 2005. The four, who had been student friends and built a nationalist association in the university town of Lund, rapidly rebuilt the party with a nationalist and social conservative ideology. Over time, Åkesson and his friends introduced what they called a zero-tolerance approach to racism and fascism, and have used this policy to expel literally hundreds of members. In an important turnaround, the Sweden Democrats are now strongly pro-Israel.

Because of the Sweden Democrats’ shady past, members of the establishment parties did everything in their power to freeze them out. In 2014, to keep the Sweden Democrats down, the established parties agreed to let the largest bloc rule even though it did not command a parliamentary majority. In practice, this means the center-Right has refused to govern even though there is an anti-socialist majority in parliament. But this strategy, which involved high-pitched alarmist rhetoric and public shunning and shaming, backfired spectacularly. In a development that will seem familiar to Americans, the Sweden Democrats turned out to be much more attuned to the sentiments and fears of the rank-and-file of voters than the political and media establishments. Every effort to isolate Åkesson and his group only increased voter sympathies for them: In 2014 they doubled their vote to near 13 percent. Opinion polls now indicate they are on track to receive between a fifth and a quarter of the vote. These new voters are comprised mainly of disillusioned former Social Democrats and conservatives.

These developments, as fundamental as they have been unexpected, show that the deeply engrained status quo in Swedish politics is collapsing. The Social Democrats are tumbling in the polls, amid a deep division between a Left focused on identity politics and those seeking to restore their position among the working class through a pragmatic approach that includes more restrictive policies on immigration. Their leader, Prime Minister Stefan Löfvén, appears at a loss to manage this very public rift.

As for the opposition, Swedish liberals (in the European sense of the term) and conservatives traditionally buried their differences in order to struggle against the almighty Left. Reinfeldt’s Allians för Sverige coalition of four center-Right parties—Moderate, Center, Liberal, and Christian Democrat—succeeded precisely because he took his nominally conservative party in a liberal direction. But the upheavals of recent years brought rising divisions within the Allians to the fore. The Moderates have rediscovered their conservative roots and embraced a restrictive immigration policy. While their new leader, Ulf Kristersson, is well-liked and competent, the party suffers from a credibility problem: All its top leaders were part of Reinfeldt’s inner circle and supported his open-borders immigration policies. Voters concerned with immigration thus ask themselves, “Why not vote for the real thing?” Such reasoning grew in appeal after Kristersson’s would-be coalition partner, the Center Party, refused to jettison its libertarian approach to immigration.

While broad sections of Swedish society are trashing about in this deep turmoil, the establishment has shown little inclination to adapt to reality. Just this spring, the Left-Green coalition government and the Center Party passed a special law to provide residence permits to 9,000 “unaccompanied minors” whose applications for asylum had previously been rejected. Most of these 9,000 were young Afghans who, according to medical examiners, were disqualified by age from the category of “minor.”

Meanwhile, the government’s most visible priority is to free Sweden of dependence on fossil fuels by 2030, a policy it has pursued by instituting punitive taxes on aviation. Opinion pages regularly publish articles that demand the prohibition of domestic air travel altogether. If successful, such a policy may temporarily restore Sweden’s tarnished self-righteousness, but only at the cost of its economic competitiveness. Amid heavy snowfall in 2016, Stockholm’s city government applied a feminist snow-removal policy, prioritizing sidewalks and bike paths supposedly used mainly by women rather than roads in business districts where mainly men work. And while the Russian Air Force simulates a nuclear attack on Sweden, the Swedish government emphasizes that it will be guided in all its actions by its “Feminist” foreign policy.

Light at the End of the Tunnel?

Sweden faces massive challenges in coming decades, challenges that require sober and pragmatic approaches rather than fantasies derived from progressive ideology. But the political and media establishments appear incapable of adapting to changing circumstances. All established political parties continue to proudly proclaim they will never cooperate with the Sweden Democrats. This, of course, is the safest recipe to ensure their continuing rise.

In the meantime, the country could become ungovernable. After the September 2018 elections, there is no realistic scenario in which either the Left-Green or center-Right blocs will be able to achieve a parliamentary majority. There is no denying that a dramatic shift has occurred in what has long been a center-Left society: Swedish voters are revolting against left-of-center parties, who are likely to command less than 40 percent of the vote this coming September. By contrast, right-of-center parties—if we include the Sweden Democrats—are likely to win the support of nearly 60 percent of voters. This is the new Swedish paradox, at least as things stand now: The Left is discredited, but the Right cannot or will not step up to the challenge of ruling the country.

After September, something will have to give if Sweden is to have a government. Liberals could defect to the Left, or conservatives could decide to rule with Swedish Democrat support. In any case, Sweden is destined for the foreseeable future to be ruled by weak coalition governments. That is unlikely either to solve the country’s problems, or to restore the myth of the perfect nation.

The post Swedish Exceptionalism Hits a Wall appeared first on The American Interest.

01 Aug 09:34

Chart of the day: Trade deficits are associated with higher, not lower, levels of US employment - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

by Mark Perry

The chart above shows graphically the close relationship over time between annual US civilian employment and US trade deficits (inverted) from 1972 to 2017. A starting date of 1972 was selected because it marked the early part of the period when the US first started running persistent and increasingly large trade deficits for goods and services. Despite the false narrative of rising trade deficits leading to U.S. job losses, the exact opposite has been true for nearly the last half-century as the chart shows: Rising trade deficits over time have been closely associated with increased levels of employment in the U.S.

The chart was inspired by Don Boudreaux’s blog post on Cafe Hayek “Morici is Simply Mistaken“:

Mr. McKinney:

I’m unsure why you think that an op-ed by Peter Morici will cause me to question my commitment to a policy of unilateral free trade. Prof. Morici consistently reveals his poor understanding of the economics of trade, and the essay of his that you sent today is par for his course.

Consider, for example, Morici’s call for “a managed trade arrangement [with China] that rebalances bilateral commerce.” I’m sorry, but this statement is beyond silly. To believe that in a world of nearly 200 countries – and especially when one of the country’s currency serves as the global reserve currency and when cross-country investments are routine – each pair of countries should have exports to the other equal in value to imports from the other is sure evidence of deep economic ignorance.

Consider also Morici’s incessant assertion that U.S. trade deficits with the rest of the world reduce overall employment in the U.S. This assertion, too, is wildly mistaken – largely, but not only, because Morici ignores the fact that a U.S. trade (or, more precisely, current-account) deficit is matched dollar-for-dollar by a U.S. capital-account surplus (meaning that the dollars in the U.S. current-account deficit return to the U.S. as dollars invested here).

But I tire of repeating the theoretical reasons why Morici’s assertion is mistaken. So I instead offer some empirical evidence. In the graph above (updated) the dark blue line is annual civilian employment from 1972 to 2017 and the light blue line is the annual U.S. trade deficit over those same years. As is plainly seen, there is in these data no evidence whatsoever that U.S. trade deficits reduce overall U.S. employment.

MP: In fact, the evidence displayed in the chart above shows that increases in the U.S. trade deficit are associated with rising, not falling, employment levels in the U.S. The statistical relationship between U.S. jobs and US trade deficits, measured by the correlation coefficient between those variables, is remarkably high at 0.825. Therefore, U.S. employment and U.S. trade deficits are highly and positively correlated over time.

Here’s just one example of Morici’s incessant and mistaken assertions about a supposed negative relationship between trade deficits and jobs.

Of all the economic policies President Trump has marked for attention this year — merit-based immigration, infrastructure and vocational training — fixing the trade deficit offers the biggest bang for the buck. Cutting the $620 billion annual trade gap in half could create 2 million jobs.

Well, Mr. Morici, consider these facts: 1) Between 1997 and 2003, the US trade deficit increased by a factor of 5X from roughly $100 to $500 billion during a period when US employment increased by more than 8 million and by more than 6%. Between 2003 and 2008, the US trade deficit increased by nearly 44% and by $220 billion, while the US added 7.6 million jobs. And between 2009 and 2017, US employment increased by more than 13 million in the post-recession recovery while the trade deficit increased by $182 billion and by 46%.

 

26 Jul 14:33

I Used to Hate Guns and the NRA. Then I Was Mugged.

by Ryan Moore

I’d hated guns since I was a teenager. It was a gun that killed John Lennon, after all. Guns killed President John F. Kennedy, Robert F. Kennedy, and Martin Luther King.

Get rid of the guns, problem solved—or so I thought. In December of 2012, I even tweeted President Barack Obama, urging him to repeal the Second Amendment and “stop” the National Rifle Association. (Never mind that a president can’t do either by himself.)

Then, a little more than five months later, in May of 2013 in San Francisco, I was mugged.

One guy held a gun in my face, and the other held a gun to the back of my head. They took my MacBook Air, two iPads, an iPhone, an iPod Touch, and my wallet.

After that horrific experience, I slowly came to see things from a different perspective. Literally, I would become the personification of the old adage that a conservative is a liberal who has been mugged by reality.

Later, I became a homeowner and realized the best way to defend against a home invasion is with a firearm. So I became a gun owner.

Not long after, I discovered I really enjoyed target shooting at the range, so I joined the NRA, and eventually became a conservative and an outspoken Second Amendment advocate.

But no, that’s not the reason I donate to the NRA. Teen activist David Hogg and actress Alyssa Milano’s anti-gun screeds are what inspire me to donate to the NRA—so that everyone at the NRA can keep working to protect our constitutional rights.

I donate to the NRA after mass shootings because of the anti-gun left. In fact, progressives calling for boycotts of the NRA and for gun bans are why thousands of new people join, and why current members donate more.

The left is the very reason donations to the NRA tripled in February after the horrific school shooting in Parkland, Florida.

When #KillTheNRA was trending on Twitter, I gave 11 NRA gift memberships.

And yes, we should allow teachers to be armed. Across the country, many teachers are being trained and are starting to carry concealed so they can fight back and defend their students.

Let’s give our teachers a chance, rather than having them sacrifice their lives by shielding their students with their bodies. It’s absurd that we protect our stadiums, banks, courthouses—and elected officials—with armed personnel, but leave our classrooms vulnerable to attack.

Just as former NRA instructor Stephen Willeford stepped up during a deadly mass shooting in November at a church in Sutherland Springs, Texas, and saved lives by stopping the gunman with his AR-15, NRA members are ready and willing to risk their lives to save others.

Gun-free zones aren’t the answer, and other gun laws are not working. Most gun control measures tend to disarm law-abiding citizens rather than criminals, who do not obey gun laws.

The NRA was founded in the 19th century and has been fighting for our constitutional rights and educating millions of people on the safe use of firearms ever since.

So in response to the NRA’s fiercest critics: No, we NRA members do not care more about guns than children, and no, the NRA is not a “terrorist” organization.

You won’t meet a more patriotic American than an NRA member—and our numbers are growing.

The post I Used to Hate Guns and the NRA. Then I Was Mugged. appeared first on The Daily Signal.

30 Jun 08:14

SHOCKER: RECYCLING PLASTIC IS MAKING OCEAN LITTER WORSE

by Anthony Watts
From the GWPF and the “Great Pacific Recycling Patch” department. Save The Oceans – Stop Recycling Plastic – video follows London 28 June: An explosive report from the Global Warming Policy Foundation (GWPF) reveals that efforts to recycle plastic are a major cause of the marine litter problem. The report, written by public health expert…
25 Mar 06:44

Obama Harvested Data from Facebook and Bragged About It. Why Are We Only Freaking Out About This Now?

by Declan McCullagh

Facebook's idiosyncratic approach toward safeguarding the personal information of its users has attracted more political outrage than the company has ever experienced. The American and British legislatures have invited Mark Zuckerberg to visit and be complained at in person, the Federal Trade Commission has let leak an investigation, and German officials are officially vexed.

What irks them is the revelation that a third-party Facebook app masquerading as a personality quiz extracted information that was sold to the political consulting firm Cambridge Analytica, which in turn provided services to Republicans. A short line is being drawn from Facebook data-profiteering to the election, still unfathomable to many Democrats, of some guy named Donald J. Trump.

Given the political leanings at Facebook, it seems unlikely that such an effect was deliberate. In 2016, Sheryl Sandberg, the company's chief operating officer, struggled to find praise sufficiently fulsome to describe Hillary Clinton; in return, Sandberg was imagined as a Clinton Cabinet official. This was approximately the same time as the flap over Trending Topics, during which we learned that Facebook's stable of editors seemed to shun conservative news sites instinctively.

In any event, the joint anti-Zuck strike force being assembled in conference rooms this week in Washington, London, and Berlin seems to be arming for a skirmish that ended years ago.

The history is this: Starting in 2010, third-party developers who convinced a Facebook user to install their apps could vacuum up a tremendous amount of information. The so-called Open Graph API included not only a user's name, birthdate, politics, and religion—private direct messages could be requested too—but also his or her friends' data. You could argue that Facebook's disclosures were insufficiently descriptive. But technically, this wasn't a data leak; users gave consent, however attenuated.

Facebook gave the fields it provided developers names like "friends_religion_politics," "friends_likes," and "friends_photo_video_tags," but a more descriptive term might be "commercially useful information that is certain to be monetized." The user IDs provided were globally unique, kind of a Facebookish Social Security Number, so companies could use multiple apps to correlate and compile cross-referenced profiles by the millions.

The Graph API's features were no secret. They were shouted to the world via press release. At his 2010 announcement at a San Francisco conference, Zuckerberg boasted that developers would now be able to download and retain Facebook data. "We've had this policy where [third-party developers] can't store and cache any data for more than 24 hours, and we're going to go ahead and we're going to get rid of that policy," Zuckerberg said. CNET reported that the audience cheered.

Four years later, Facebook reversed course, saying it had chosen to discontinue those features of the Graph API. The equivalent of a global Facebook-wide identifier would be replaced with application-specific IDs. Friend data would be sharply restricted. The changes took effect in April 2015.

No Senate hearings or congressional investigations convinced Facebook to pull the plug. No flurry of investigative news articles preceded it (there appears to have been not one New York Times or Washington Post article discussing the Graph API in the prior year). No Federal Trade Commission investigation loomed; Facebook had already reached a privacy settlement with the agency in 2011 that altered the Graph API not one whit.

The most likely explanation for the 2014 policy shift is the simplest: The company realized, however belatedly, that even Facebook users want more control over how they share their information. Market pressure (or, perhaps, market dominance and less fear of alienating developers) had closed a privacy loophole. At the F8 conference that year, Zuckerberg said, "We take this really seriously because if people don't have the tools they need to feel comfortable using your apps, then that's bad for them and it's bad for you. But it will prevent people from having good personalized experiences and trying out new things but it also might hurt you and prevent you from getting some new potential customers. So we need to do everything we can to put people first and give people the tools they need to build a sign in and trust your apps."

Today it's almost tempting to feel sorry for Zuckerberg, who must be puzzling over why it took politicians eight years to discover the existence of a feature that has been publicly documented since its inception and was discontinued three years ago.

Zuckerberg must also be contemplating a second oddity. There was no privacy outcry when Barack Obama's 2012 campaign took advantage of the same Graph API to exfiltrate information of tens of millions of Facebook users without each voter's knowledge and consent.

Time.com's report immediately after the election was laudatory. Extracting data from Facebook, it said, "will transform the way campaigns are conducted in the future." It concluded, presciently, that by 2016 the Obama campaign's approach "is almost certain to be the norm."

The Obama campaign's extensive harvesting of social graph data triggered Facebook's internal safeguards, according to an article a year later in The New York Times Magazine. But Facebook allowed it to continue. "It was more like we blew through an alarm that their engineers hadn't planned for or knew about," Will St. Clair, a programmer for the campaign, told the magazine. "They'd sigh and say, 'You can do this as long as you stop doing it on Nov. 7.'"

"We ingested the entire U.S. social graph," Carol Davidsen, director of data integration and media analytics for Obama for America, told The Washington Post this week. "We would ask permission to basically scrape your profile, and also scrape your friends, basically anything that was available to scrape. We scraped it all."

It would be impolite, of course, to accuse the Democratic politicians demanding Zuckerberg's scalp of double standards. Perhaps Sen. Amy Klobuchar (D–Minn.), who wants to interrogate Zuckerberg in person, has only recently immersed herself in API specifications. Perhaps Sens. Ed Markey (D–Mass.) and Richard Blumenthal (D–Conn.), who issued their own demands to Zuckerberg, happened to miss the 2013 article about how the Obama campaign "blew through an alarm." (The inexplicable is not limited to Capitol Hill: A cadre of left-leaning privacy activist groups who remained mum before now believe the Federal Trade Commission should investigate.)

The danger now is regulatory overreach. It's possible to acknowledge that Facebook's original Graph API was leaky—user notification and consent could have been handled far better—while being worried about what Washington officialdom may concoct as suitable punishment for Internet companies. Good laws and sound policy are rarely made during times of moral or partisan panic.

16 Mar 21:48

The Dying Art of Fishing for Shrimp on Horseback

by Natasha Frost
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Dominique Vandendriessche has shrimp fishing in his blood. Now in his twenties, Vandendriessche lives and works on the Belgian coast, in the small town of Oostduinkerke, where he is one of the last fishermen alive who catches shrimp from the back of a horse. As a little boy, he says, he accompanied his parents to the shore and watched as his father, Johan, made his way into the waves on the back of a towering Belgian draft horse. Now, Vandendriessche is carrying on the family profession, accompanied by his horse, Jim.

Oostduinkerke is on the southern edge of the frigid North Sea. Its beach is flat and empty, sloping gently into the water, without obstructions or obstacles. From the shore, the water looks unremarkable, if a little chilly. But beneath its surface is an abundance of tiny crustaceans: common, grey-brown shrimp that cluster in shallow waters. Not even two inches long, they are a gourmet treat, served cold as tomate-crevette—hollowed-out beefsteak tomatoes, filled with a tangle of shrimp and mayonnaise—or hot, in a deep-fried, battered croquette. More simply, they are sometimes boiled in lightly salted water and served whole, as a snack alongside local craft ales.

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First, however, they must be caught. The fishermen, known in Flemish as paardenvissers, ride Brabant horses, a regional breed that is large and sturdy (generally around 5’7”, or 16 hands, at the withers), with dense feathering on their lower legs, flaring out over their hooves like the bell of a trumpet. The Vandendriessches have six. A few times a week, they harness a chosen horse to a cart via a special wooden saddle and bring it down to the shore. The cart is piled high with equipment—nets, clothes, baskets, and sieves—and the fisherman must perch on its side.

On the grey-blue beach, beset with flocks of seagulls, the horse waits while the fisherman pulls yellow waterproofs over his clothes—pants, secured around the ankles with twine, and a hooded oilskin. The pair walk into the waves, rider on horseback, until the horse is breast-deep in the surf, jerking its head to avoid the seawater that licks at its nostrils.

Behind them, a 30-foot funnel-shaped net stretches back into the waves. As the horse walks, a chain dragged over the sand creates vibrations—causing the shrimp to jump into the net as gaily as if they’d been called for supper. Slowly, they go to and fro, walking the length of the flat coastline, as the net fills with shrimp. Once every half hour, they return to the beach: The horse has a few moments to rest as the fisherman empties the net, using wooden sieves to sift through the catch.

Jellyfish, small fish, and other unwanted sea life are jettisoned back into the ocean, while the shrimp are placed into vast baskets dangling by the horse’s sides. Once they have enough, perhaps 20 or 30 pounds of shrimp, they will return home, where the shrimp are washed, and washed, and washed again before being boiled in a pot over an open flame. (Exactly what each fisherman adds to their pot is a closely-kept secret.) When their sand-colored shells turn a deep puce, the shrimp are ready to be sold on the beachfront or to local cafés. It is labor-intensive and unprofitable: In 2007, fisherman Eddy d’Hulster told the New York Times that the tourist board makes up the shortfall by providing free pastures and stables and financial stipends that help cover equipment costs.

The process looks slow and meditative—the horse and rider winding back and forth—but the practice requires considerable skill and knowledge of the ocean, tides, and the horses themselves, says D’Hulster. “The fisherman must love their horse, the sea, and the fishing. It’s a combination of all three.” Choosing the right horse is a crucial part of the equation, D’Hulster told the Times. "The first time a horse sees the sea and the waves, you can see it running back. They don't like it." But the right horse is a lifelong companion. "There is such a love story between the horse and the fisherman," he said. "Once he has a horse that works, he is married to the horse. Sometimes we say we like our horses more than our wife." The two must trust one another absolutely, especially in the face of occasionally strong currents.

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Barely a century ago, shrimp fishing on horseback was a common sight along the Belgian coast and throughout Europe, preserved in the paintings of 20th-century Belgian artist Edgard Farasijn. But it’s fallen victim to urbanization, commercial fishing boats, each of which can pull in 75 tons a year, and dwindling interest from town residents. That’s part of the reason why Oostduinkerke wants to protect the practice and ensure it isn’t forgotten. In the summertime, children and tourists congregate around the fishermen on the beach while, in nearby Koksijde, the National Fisheries Museum chronicles the history and culture of horseback shrimp fishing. This attention, along with a handful of media appearances and a coveted spot on the UNESCO intangible heritage list, helps fund the tourism board that, in turn, keeps the trade alive—albeit as a museum piece.

Each family, therefore, continues much as they have for years or generations. The Vandendriessches have a strict division of labor: Dominique and his father fish; his mother cleans and cooks, serving the shrimps in their family restaurant. According to Marina Laureys, from Belgium’s Arts and Heritage Agency, “Since knowledge is often passed on within the households, families teach their children at a young age how to handle the horse in the specific conditions that the craft requires."

That intergenerational knowledge encompasses all aspects of the trade—weaving the nets, maintaining the wooden apparatus, the actual fishing—along with the ins-and-outs of horsemanship, including reshoeing the horses and grooming them. Most present-day practitioners come from these families. Still, fishermen and local residents alike hope that safeguarding the craft and ensuring its financial stability may draw in new and enthusiastic young practitioners with a background in keeping horses. But it’s methodical, unglamorous work, D’Hulster says, and unsuited to those doing it simply for the attention of tourists and the media. Successful fishermen must have discipline and a deep love for the sea, their horse, and their heritage. “The horses require your passion all year long,” he says. “All year long.”

16 Mar 17:33

Why Is Silicon Valley’s Cool New Self-Flying Taxi Taking Off in New Zealand Instead of California?

by Declan McCullagh

The air taxi vehicle developed by the startup called Kitty Hawk is now public, and it is impressive. The aircraft will be able to take off vertically and fly up to 60 miles, intelligently piloting itself during the entire flight.

Kitty Hawk is funded by Alphabet CEO Larry Page, and boasts a lineup of accomplished executives from the San Francisco Bay area, including alumni from Google, Twitter, and Virgin America.

But instead of launching an air taxi service close to their homes and families in Silicon Valley, Kitty Hawk chose New Zealand—a not-very-convenient commute that's something like 15 hours each way.

Kitty Hawk did preliminary testing at an airstrip in Hollister, an agricultural town about 50 miles south of San Jose, and the company's headquarters has not shifted from Mountain View. But when its executives conducted a global search for a location to start a service that would eventually carry passengers, California failed to make the cut.

A report from New Zealand's Stuff.co.nz news site explains why. It quotes Fred Reid, Kitty Hawk's chief operating officer, as saying they were looking for a country that was open to new ideas, such as approving a single aircraft design that could be used from testing through commercialization. New Zealand Prime Minister Jacinda Ardern said she wanted to send "the message to the world that our doors are open." Another excerpt: "[CEO Sebastian] Thrun said when meeting people from the government for the first time, the first question everyone asked was how they could make the process faster for Kitty Hawk."

It turns out that startups designing autonomous vehicles are as mobile as the aircraft they dream up. If the United States is perceived as too slow to recognize the benefits of these technologies, companies will look elsewhere.

The sheer weight of the regulatory structure for autonomous planes will "strangle further innovation—at least in the U.S.," Joe Blair, a vice president at Vancouver, B.C.-based Chrysalix Venture Capital, wrote in an essay last year. "Other countries have welcomed autonomous drones with open arms."

France and Switzerland allow drones more flexibility than the U.S. when operating beyond visual line of sight. New Zealand was the location that Domino's chose for the world's first commercial drone delivery service (the pizza's flight time was less than 5 minutes). A cluster of drone companies is forming around Delft in the Netherlands. Dubai will host Uber's air taxi service, a Kitty Hawk competitor that's scheduled to launch in 2020.

"It's really a problem," Janina Frankel-Yoeli, vice president of Israel's Urban Aeronautics, told the BBC. Current aircraft are already "virtually capable of taking off, flying and landing on their own," but the Federal Aviation Administration (FAA) will not allow them to fly without a pilot. Greg McNeal, co-founder of drone software company AirMap, told Recode: "We asked why autonomous cars weighing 3,500 pounds can drive next to hundreds of pedestrians, but a three-pound drone can't fly over people."

Nobody wants to wake up to an autonomous vehicle crashing through their roof, but it's possible to prevent that without driving companies overseas. Requiring passenger services to secure a hefty amount of insurance is one approach—strict regulations would exist, but would be drafted by insurers. A model can be found closer to the ground: the insurance industry's car safety ratings tend to be tougher and more comprehensive than the federal government's. (The FAA already recognizes "equivalent levels of safety.")

For its part, the FAA has shown some signs of trying to break out of a 1950s-era regulatory mentality. In 2016, it released what it calls Part 107 rules for drone operations. These permit lightweight line-of-sight drones operated by a human; waivers are available to permit night flying or operating beyond line of sight. But Part 107 waivers do not extend to carrying passengers or autonomous operations.

Not helping matters is the dizzying complexity of regulations: Part 107 waivers don't apply to aircraft over 55 lbs., so an operator of a heavier drone may need a section 333 exemption with a part 61 pilot rating, plus a "blanket Certificate of Waiver or Authorization" for flights at or below 200 feet. There's also been a flurry of quasi-contradictory governmental announcements: six test sites, then 333 exemptions, then a "Center of Excellence" for drones, then Part 107, and finally a "UAS Integration Pilot Program." Aviation lawyer Jonathan Rupprecht quips: "How do we know that some new program won't come along a year later and be the cool new thing on the block?"

For his part, President Donald Trump seems to recognize the job potential of drones: Last fall, he directed his Transportation Department "to promote the safe operation of unmanned aircraft systems" including for human transportation. That sounds like rare common sense. For the next Kitty Hawk to fly in Kitty Hawk, North Carolina, instead of in Canterbury, New Zealand, we need more of it.

12 Mar 10:52

Congress Is Bad at Budgeting

by Veronique de Rugy

Congress is dysfunctional—and nothing illustrates that like the body's increased reliance on short-term funding bills in place of comprehensive budgets, right? These continuing resolutions (C.R.s) are often used in times of crisis to prevent a government shutdown when Democrats and Republicans can't agree enough to pass any of the 12 regular appropriations bills before October 1, the beginning of the next fiscal year, as required by the Congressional Budget Act of 1974.

Yet a look at the data suggests that the number of C.R.s hasn't actually spiked in the last few years. According to the Congressional Research Center, between 1977 and 2018, Congress has enacted an average of 4.4 continuing resolutions per year to keep the government running. While there has been an uptick in their use, it started way back in 1997. Before then, the annual average was 3.3. Since, it has jumped to 5.1. At its worst, Congress passed 13 C.R.s in 1996 and 21 in 2001.

A better measure of congressional dysfunction is the number of regular appropriations bills enacted on time by Congress. That tally has plummeted since 1977 and stalled at zero since 2010, mostly thanks to the Senate. The House of Representatives passed all 12 appropriations bills for fiscal year 2018, for example, only to watch each one die in the upper chamber.

Sources: Congressional Research Service, "Continuing Resolutions: Overview of Components and Recent Practices"; U.S. Congress, "Appropriations for Fiscal Year 2018"

17 Feb 09:50

Is There a Connection Between Bad Grammar and Negative Online Reviews?

Negative online reviewers make a lot more errors than positive ones.
15 Feb 07:37

Meet the Artist Who Makes Creatures Out of Cutlery

by Anne Ewbank
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One of the internet era’s unlikely art stars, the Charleston-based Matt Wilson has made dozens of headlines for his intricate metal sculptures. Many share a common, curious motif: They depict animals and birds, all improbably made from cutlery.

Wilson’s artistic journey has been just as unusual as his work. He grew up in Greenville, South Carolina, and eventually pursued a drawing and painting degree at Winthrop College. But, feeling burnt out, he left school with one year to go. “I'm not a great student,” he says. So he headed to Charleston, where he did landscaping while beginning to explore metal sculpture as a medium. Looking for work, he applied for a job at Detyens Shipyard, Inc., in hopes that he could also hone the skill of welding for his art.

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It turned out to be a serendipitous choice. During the hiring process, he met the owner of the shipyard, Loy Stewart. After hearing about Wilson’s background, Stewart made up a job for him on the spot. Wilson became the shipyard’s artist in residence, drawing ships that came in to be serviced as gifts for their respective captains. After a year of learning to weld and work with metal, he began making miniature ships instead of sketches, occasionally working on other projects, too. Stewart, he says, “wanted to see me become an artist.”

After ten years at the shipyard, Wilson has gotten faster and faster at crafting ships, giving him more time to focus on non-nautical art. Earlier, his mother had given him a bag of old utensils to have around his workshop at the shipyard. After considering a set of spoons, he bent the metal into simple shapes that suggested two birds together. He called the piece “Lovebirds.”

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Upcycling—that is, turning discarded or inexpensive materials into something new—became the name of Wilson’s game. Now, in addition to the wonders within his Etsy store, AirtightArtwork (temporarily empty as he restocks), Wilson makes statues on commission. Pictures of his work have traveled across the internet, and have been published in newspapers as far away as Hong Kong. Just last week, he says, he was invited to participate in an upcycled art show in Paris.

The shipyard is a natural and rich source for material (or, as he puts it, “all kinds of cool metal”). When a local industrial sewing facility closed after 100 years in business, Wilson traded a large handmade owl statue for the opportunity to net a century’s worth of tiny metal bobbins and pulleys. These days, Wilson patrols 11 thrift stores around Charleston in search of silverware. He admits he could probably ask store owners to set aside utensils for him, but the chase is too good to give up. Stainless steel often makes an appearance in his work, along with silver-plated metal. Almost everything is usable, he says, with one notable exception: IKEA cutlery, which snaps whenever he tries to work with it.

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In Wilson’s sculptures, the bowls of spoons become the curved heads of birds, while handles evolve into jaunty tails. After years of forging birds from spoons, Wilson began mixing it up with other cutlery as well. The shift in cutlery type has yielded other treasures: The tines of forks and steak knives form wing feathers, and slotted serving spoons bloom into rounded chests.

Living near the ocean means Wilson has also dipped into depicting sea life. One commission, from Hawaii, requested that Wilson make a metal whale. To craft the creature, Wilson used metal serving tongs for its fins.

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Most of his birds still start with two spoons, which comprise the body. However, Wilson is reluctant to disclose how exactly he bends and welds his creations together. “It’s something I’ve defended for a long time,” he says of his technique, citing rampant copycats. “It took so many years to get where I’m at, from those first simple birds that were just two spoons.” Part of the joy of Wilson’s work, too, stems from sussing out how the disparate elements of each sculpture seamlessly fit together to form these winged creatures.

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Viewers may have to also make some guesses as to the breeds of his sculpted creatures. Unless it’s a commission, Wilson usually doesn’t make specific birds. At the craft shows he attends, though, people will come up to him and start categorizing his birds on display. ”They'll just start pointing out, 'Oh, that's a wren, that's a chickadee, this is obviously a blue jay,” he says. “I get a lot of birders telling me I’m doing things just right, though.”

10 Feb 13:59

West Africa's Libertarian Moment

by Jillian Keenan

In December 2017, after 10 years of delays, Senegalese president Macky Sall finally unveiled the brand-new Dakar airport before a crowd of supporters waving posters of his face. With a cost of roughly $600 million, and a footprint five times the size of the previous airport, nothing about the project was small—including its ambitions. The presidents of Gabon, The Gambia, and Guinea Bissau joined Sall for the launch, underlining the dream: Blaise Diagne International Airport, they hope, will become a regional transport hub that jump-starts local economies and symbolizes the bright West African future.

As it turns out, the airport inauguration did symbolize West Africa's shifting climate. Just not in the way any of the politicians planned.

A new airport needs a new airline, so the Senegalese government launched one of those, too. Air Senegal, the new state-owned national carrier, replaces its predecessor, Senegal Airlines (shut down in 2016), which itself replaced Air Senegal International (shut down in 2009).

Everyone hoped that Air Senegal could succeed where those before it failed. Aviation Minister Maimouna Ndoye Seck insisted a national airline was "a necessity." Government officials wanted the airline to claim the honor of operating the new airport's first commercial flight.

But it was not to be. Air Senegal couldn't get all of the necessary flight licenses together in time for the launch, so its inaugural flight was symbolic only. Instead, the honor of the new airport's first commercial flight went to Transair, a privately owned local carrier.

As the government airline watched from the ground, burdened by gravity and the weight of unfinished paperwork, the private airline took off.

Enter Africapitalism

For decades, West Africa was inhospitable soil for the seeds of libertarianism. Léopold Senghor, the first president of Senegal, famously argued that socialism is an inherent fit for the region, saying: "Africa's social background of tribal community life not only makes socialism natural to Africa, but excludes the validity of the theory of class struggle." Along with Kwame Nkrumah of Ghana and Modibo Keita of Mali, Senghor designed a model of West African governance in which social development would be guided by a large public sector. Driven by this vision (and considerable financial support from the USSR), state participation in regional economies was taken to extremes: in Ghana, for example, Nkrumah nationalized all foreign companies, imposed price controls, collectivized agriculture, and established state-run industries in everything from cocoa processing to pharmaceuticals to metallurgy.

But George Ayittey, a Ghanaian economist who has argued that "Africa is poor because she is not free," says private business and free enterprise have deep—albeit misunderstood—cultural roots on the continent. Visit any market and it's plain to see: West Africa is an energetic hive of entrepreneurship.

"One can be communalistic or socialistic without being a socialist," Ayittey writes in Defeating Dictators: Fighting Tyranny in Africa and Around the World. "In peasant societies, the means of production are owned by the clan, [which] acts as a corporate body or unit. However, the clan is not the same as the tribal government; it is a private entity and, therefore, the means of production are privately owned."

He describes West Africa's history of socialist experiments as a rejection of colonialism: After all, Lenin said imperialist colonialism is the highest stage of capitalism, so it makes sense that the Lenin-reading survivors of imperialism would reject its alleged economic roots. But that rejection (and the pillaging legacy of colonialism) has resulted in a paradox: At the turn of the 21st century, Africa was the richest continent in the world in terms of natural resources, but the poorest in terms of socio-economic development and inclusive growth.

But after decades of heavy-handed government regulation, something new is happening across West Africa. Privatization, deregulation, and free market capitalism—along with growing skepticism of state control—are gaining momentum.

Ayittey cautions against characterizing the movement as a specifically "libertarian" one—"ideological tenets that are meaningful in the U.S. may not necessarily translate in Africa," he says, noting that, for example, the term conservative has different meanings in the United States and Russia. But he agrees that West Africa has a growing "disgust or revulsion against political leaders and governments." Nigerian entrepreneur Tony Elumelu calls it "Africapitalism"—the urge to combat economic and social challenges with entrepreneurship rather than charity or state intervention.

"It is a drastic departure from the old model of centralized governments managing basic industries," Elumelu writes in his manifesto, Africapitalism: The Path to Economic Prosperity and Social Wealth. "That is the heart of Africapitalism: long-term investment that creates economic prosperity (a commercial objective), as well as social wealth."

West Africa is certainly not a utopia of unfettered socio-economic liberty. Anti-government theories are growing largely because the region's political leaders have crammed authoritarianism down citizens' throats for so long. In recent months, Cameroon's Francophone-dominated government has cracked down violently on Anglophone secessionists seeking independence. In Senegal, Franco-Beninese activist Kemi Seba was arrested and deported after he publicly set fire to a banknote to protest the colonial currency still being used by eight West African countries. In November 2017, the Mauritanian Cabinet approved an amendment to the penal code that would punish "defamation to God, the Prophet Muhammad, Holy Books, angels or prophets" by death. LGBT rights in the region are bad in theory and even worse in practice. In the Cato Institute's 2017 Economic Freedom of the World report, almost all West African nations were placed in the "least free" category. It would be silly to pretend activists in the region aren't at the beginning of a long and difficult climb.

But although authoritarian governments die hard, they are dying in West Africa. In 2014, when Burkinabé President Blaise Compaoré tried to amend the constitution to extend his already 27-year-long term, protesters responded with a series of uprisings that ultimately forced Compaoré to dissolve his government and flee to Côte d'Ivoire. In Togo, anti-government protesters are currently thronging the streets in an attempt to overthrow the Gnassinbé dynasty, which has maintained control over the country for more than five decades by terrorizing those who speak out against corruption and misrule. And with the fall of The Gambia's Yahya Jammeh in early 2017, all 16 countries in West Africa now have democratically elected governments. In November, The Gambia even got its first private television station.

This momentum has swelled to include more than just the fall of authoritarian political dynasties. In 2016, the African Union launched a common passport that will grant visa-free travel to all member countries by 2020—a move that regional libertarian activists, such as African Students for Liberty's Oluwafemi Ogunjobi, hail as "a key step towards…economic growth with free movement of people, goods, and services." Other deregulatory economic policies have sparked excitement, too: After the Nigerian government privatized the telecommunications industry in 1999, the sector boomed, contributing over 6,000 jobs and an additional 6.97 trillion naira (or 8.68 percent) to the gross domestic product (GDP). When Senegal dismantled its government monopoly on cement, prices fell by a third.

"We are witnessing the beginning of a major intellectual revolution," says Ayittey. "In the past, the people were not willing to complain and accepted whatever excuse the government gave them. Not anymore."

Changes are afoot in West Africa. As activists for social and economic liberty increasingly shape the regional dialogue, it's worth asking: Is this West Africa's libertarian tipping point?

Reducing Harm

In November 2009, the burned-out carcass of a Boeing 727 was found in the arid deserts of northern Mali. Investigators said smugglers had used it to fly a shipment of drugs in from Venezuela, unloaded them, and then torched the plane to hide the evidence. Transatlantic flights of drugs have also been recorded in Guinea-Bissau and Sierra Leone—a flashback to the 1970s and '80s, when drug smugglers flew openly between Colombia and the U.S. border. Today, the estimated annual value of cocaine transiting through West Africa is $1.25 billion—significantly more than the annual national budget of several countries in the region.

And West Africa isn't just a transit hub; the region's production capacity is growing as well. Synthetic drug production centers have emerged in Côte d'Ivoire, Guinea, and Nigeria; according to a report from the International Narcotics Control Board, 10 meth labs were dismantled in that last country between 2011 and 2015, and drug production chemicals have also been seized in Senegal.

So to consider West Africa's shifting stance on state control, drug policy is a good place to start.

For decades, regional drug policy has emphasized criminalization, with ineffective and even counterproductive results. Policies are harsh: In Ghana, drug use carries an automatic minimum sentence of five years. Possession is not distinguished from trafficking and carries a minimum of 10 years. Prohibition has fueled health hazards, such as the HIV epidemic and the spread of hepatitis C, and put pressure on the region's already overburdened criminal justice system. It also limits economic options for Ghanaian farmers, whose work accounts for 21 percent of the country's GDP; in 2016, a farmer was sentenced to an astonishing 15 years in prison for growing marijuana.

But the tide is turning. In 2014, a report from the West Africa Commission on Drugs concluded: "We believe that the consumption and possession for personal use of drugs should not be criminalized. Experience shows that criminalization of drug use worsens health and social problems, puts huge pressures on the criminal justice system, and incites corruption."

Those recommendations are translating into policy. Ghana is on the brink of becoming the first country in the region to decriminalize the personal use and possession of all drugs, and several other countries are poised to follow Ghana's lead.

"You'd be amazed at how people's opinions have changed about the need to decriminalize drugs," says Maria-Goretti Loglo, a Ghanaian lawyer and consultant for the International Drug Policy Consortium. "We have come to acknowledge the fact that the same methods we've used over and over again haven't helped solve the problem."

Loglo says the government's first draft of the drug bill was terrible. It "sought to raise penalties with the mindset that, when you severely punish people, they will stay away from drugs." But when civil society organizations, such as the West African Drug Policy Network, intervened, they were able to convince legislators that an evidence-based decriminalization approach would save lives.

The specific details of the current legislation are still under debate, but, remarkably, both political parties agree that the final policy will end imprisonment for use and possession—a first for the continent.

According to Loglo, who helped develop the current policy recommendations, first-time offenders will be given a warning. Second-time offenders face a proposed fine of 100 "penalty units" (1,200 Ghanaian cedis, or $267), although some are pushing to have that fine cut in half. Third-time offenders will be referred to treatment and counseling programs.

"Initially, we had a lot of resistance," says Loglo. "But now you'd be amazed—the majority of parliament [members] support it. Yes, there are one or two individual legislators who feel this is a moral issue that people must be punished for, but they are the minority."

The Ghanaian policy has provoked excitement and optimism from harm reduction advocates around the world. "It will be huge," says Niamh Eastwood, the executive director of Release, a London-based drug policy organization. "It will be beneficial to the state in terms of economics, but it's also treating people with the dignity they deserve. It's groundbreaking for West Africa."

Ghana's position on the issue is already influencing other countries in the region. William Ebiti, the point person for Nigeria with the West African Drug Policy Network, says the country was considering a bill that would tighten punishments for drug possession, but that bill has been put on hold. Instead, Ebiti has been asked to facilitate a roundtable discussion between government officials, traditional leaders, international organizations, and civil society groups in Northern Nigeria to explore decriminalization and harm reduction options.

The Nigerian Drug Law Enforcement Agency "is beginning to soften its tone on the issue of possession," Ebiti says. "We are seeing a slow shift in terms of attitude towards drug use. Something very interesting is happening."

Students for Sensible Drug Policy, an international network that "neither condones nor condemns drug use" but campaigns for "the right of individuals to make decisions about their own health and well-being," has chapters in Sierra Leone, Gambia, and Liberia as well as Ghana and Nigeria. The activism that has spread across the region is manifesting in policy: Stakeholders involved in the Ghanaian legislation, for example, recently traveled to Monrovia to discuss their findings and policy recommendations with the Liberian president.

"Liberia is really prepared to engage with us as to what kind of changes we can bring," says Loglo, noting that the country's long civil war left an unusually large number of addicts—mostly former rebel soldiers who were fed on drugs. "We met with the attorney general, and they are prepared to amend their laws to give an opportunity to these communities."

Ghana is on the brink of becoming the first country in the region to decriminalize the personal use and possession of all drugs, and several other countries are poised to follow Ghana's lead.

Loglo adds that Benin and Guinea are also discussing drug policy reforms. And the region's first harm reduction center—where drug users are offered health services and a safe place to get high without fear of legal punishment—opened in December 2014 in Dakar, Senegal. It's been so successful there are plans to open a second in Mbour, and others are being developed in Cabo Verde and Côte d'Ivoire.

"It's a tipping point for West Africa," says Loglo. "Government is beginning to listen to civil society, and that is the way forward. Government cannot do everything."

Privatizing Schools

If any education system is ripe for change, it's Liberia's. During the country's 14-year civil war, gangs of rebel soldiers ransacked schools, ultimately forcing an estimated 80 percent of them to close. Then the Ebola epidemic came along to make a bad situation worse: The few schools that had survived the war had to close for seven months while the country grappled with a public health crisis.

Today, the effects of Liberia's history on its education system are obvious and devastating. Fewer than 60 percent of school-age Liberian children are actually in school—one of the lowest net enrollment rates in the world. Even among those who are enrolled, the picture is grim: Less than one in five adult women who reached fifth grade in the country can read a single sentence. In 2013, roughly 25,000 high school graduates took the University of Liberia's entrance exam. Every single one failed.

Desperate for solutions, President Ellen Sirleaf appointed George Werner, a former teacher, to the position of education minister in 2015. He faced a daunting task. With a budget of only $44 million, he was to bring Liberia's education system back to life.

Werner moved quickly and dramatically. In September 2016, he announced an experiment with private primary education. The project, called Partnership for Schools in Liberia (PSL), handed over management of 93 schools to eight private companies, including for-profit providers and charities.

Roughly a quarter of those—25 schools in total—went to Bridge International Academies, a U.S.-based for-profit education provider sometimes referred to as the "Uber of education." With more than 100,000 children enrolled in its schools in India, Kenya, Uganda, and Nigeria, and with high-profile investors such as Chan Zuckerberg Initiative and Bill Gates Investments,* Bridge is one of the largest providers of low-cost education in the world.

The remaining 68 schools were divided among seven other organizations via a competitive bidding process. Werner's bold proposal was widely reported as the largest, and most ambitious, privatization project in Africa's recent history. "Our challenge to fix education is gigantic," he said at the time. "Partnership Schools offers us an unprecedented opportunity to confront and fix as many broken pieces as we possibly can."

Data suggest the effort worked. An independent randomized control trial from the Center for Global Development found that after one year, test scores rose by 60 percent in public schools managed by private contractors. Students in the private-management experiment also had better access to school supplies: They were 19 percent more likely to have textbooks, 18 percent more likely to have chalk in their classrooms, and 10 percent more likely to have pens and pencils. Even when the results did not reflect especially well on either system—a random spot check found that only 68 percent of PSL teachers were physically at school, as compared to 54 percent of government teachers—the private program numbers looked better.

Buoyed by those statistics, the PSL program was doubled to include 202 schools for its second year. "The world was watching to see whether Liberia's education system could be transformed," Shannon May, a co-founder of Bridge International Academies, announced. "And the answer is yes."

But from the start, the project was plagued with controversy. Kishore Singh, the U.N.'s special rapporteur on the right to education, condemned the experiment as "completely unacceptable" and "a blatant violation of Liberia's…obligations." At upward of $25 million over three years, not including the costs of its planned expansion, critics questioned whether PSL was worth the investment. And there were disturbing anecdotes: According to one report, after a Bridge PSL school promised students a school lunch program but failed to deliver, the poorest students simply dropped out.

Even those test score improvements provoked debate. Steven Klees, a professor of international education policy at the University of Maryland who thinks PSL represents the "McDonaldization of education," argues that when controls for student pre-test scores and other factors are taken into consideration, student improvement goes down from 60 percent to 35–45 percent. That's still an improvement—but Klees does not think it's due to the privatization scheme.

"To me, it has nothing to do with privatization," says Klees. "PSL schools had smaller class sizes, more instruction time, better trained teachers, and didn't have to follow the existing primary school curriculum—all things you could easily do in public schools. Given that difference in resources, I'm honestly surprised the PSL test scores went up so little."

The economics of the plan have provoked questions as well. Here's how it works: The Liberian Ministry of Education (MOE) already spends $50 per year on every student in the system, most of which goes to teacher salaries. Under the privatization experiment, that didn't change: Both PSL and non-PSL students continue to receive that $50 baseline from the ministry for the duration of the proposed three-year pilot. But the MOE wanted to see what additional spending, when combined with private management, could achieve—so it raised an additional $50 per student per year from philanthropic organizations and other donors. (It also freed up funds by purging more than 6,000 "ghost teachers"—teachers who never existed but likely had been added to the system to generate salaries that lined the pockets of corrupt officials—from the payroll.)

On top of that, the eight private PSL providers were free to raise additional money if they chose. After all was said and done, the private provider that produced the most impressive student improvement statistics, Bridge International Academies, had spent a staggering $373 per student in its first year of operation, not including start-up costs. Bridge supporters are quick to emphasize that those additional funds came at no cost to either the Liberian government or to Liberian parents.

But others argue that the big test scores—and their big price tag—aren't sustainable long-term. Klees pointed to the example of Edison Schools, a for-profit private contractor that reported only one profitable quarter while it was publicly traded. (Bridge International Academies is not currently making a profit.) To survive, Edison Schools was eventually forced to move away from school management and into supplemental services, such as testing and tutoring.

As PSL enters its second year, education professionals around West Africa and around the world are watching Liberia—and interest in private options to address regional education deficits is spreading. In October 2017, one year after the launch of PSL, the Nigerian Stock Exchange "donated" a Bridge International Academies school to the Borno State Government. (Borno is one of three so-called "emergency states" most affected by Boko Haram.) In Ghana, 5.6 million cedis (about $1.25 million U.S. dollars) of microfinance loans have been disbursed to 584 low-fee private schools; the program reaches almost 140,000 kids and boasts a 92 percent loan repayment rate. Meanwhile, in Sierra Leone, Rising Academy Network (another for-profit education provider) started with one school in 2014 but quickly grew to include 2,000 students at all different grade levels throughout the country.

Rising Academy, which also runs 29 schools in Liberia through PSL, initially entered West Africa as a purely private response to need, rather than at a government's invitation. Like other low-cost private education efforts, it has attracted controversy. Tuition at the company's schools in Sierra Leone is $140 per year—a steep price in a country where, according to a World Bank estimate, gross national income per capita is $340. (That means 72 percent of the population lives on less than $1 per day.)

"Our parents are average Freetown residents," claims Christina PioCosta-Lahue, the managing director of Rising Academy Network. "They're not just the elite." She stressed that tuition can be paid in installments and includes "everything: uniforms, workbooks, everything the students need." But that's not quite true—when asked if the tuition includes school lunch, PioCosta-Lahue admits it does not.

The relatively expensive option does seem to produce results, though. A three-year impact evaluation of Rising Academy schools in Sierra Leone by Oxford education psychologist David Johnson found that the private students had made two to three times as much progress in reading and math as their peers in government schools. And advocates of private education options in the region emphasize that even desperately poor parents want what any other parents want: the most effective education options for their kids.

"People who respond negatively to the idea don't know this context well, if at all," says PioCosta-Lahue. "The situation we found in [government] schools was really dire—unimaginable to someone in D.C. What parent wants to send their child to a school where the teacher is illiterate?"

Changing Minds

In West Africa, enterprise starts with the soil. According to the World Economic Forum, an estimated 70 percent of people on the continent depend on agriculture for their livelihoods. But regional governments have struggled to boost the economic potential of their farmers; often they've been unable or unwilling even to get out of the way. In Senegal, for example, cattle are the main capital for 30 percent of citizens—but imported powdered milk is taxed at 7 percent, while the taxes imposed on local milk add up to a crippling 30 percent.

No conversation about the present (and future) of socio-economic liberty in West Africa can ignore the region's farmland—which is why it's no surprise the next generation of West Africa's libertarian activists hatched on a chicken farm.

At 24, Olumayowa Okediran had just graduated from university. Like other Nigerian graduates, he entered the National Youth Service Corps, a required national service year that gives people work placements around the country. Okediran was sent to a small village called Fasola, to work on a poultry farm. Tending to the chickens was fun. But the economics of the enterprise made him grumpy.

"It was very unproductive," he says. "I kept pondering why the farm had not been sold to a private investor to manage it. They were making huge losses—it was unsustainable, and it was a waste of money."

Frustrated with the inefficiency he saw by day, Okediran used his nights to fantasize about ways to take the pet project he had started during college—a small group called the African Liberty Students Association (ALSO)—to a broader audience. "I was slaving away for the government," says Okediran with a laugh. "But I spent that time building the groundwork for something big." By 2013, he'd brokered an alliance between ALSO and the U.S.-based Students for Liberty.

Today, the child of that union—African Students for Liberty—boasts more than 6,000 contacts in 22 countries around the continent. It's Africa's biggest libertarian group.

As the momentum continues to build, everyone agrees: Conversations about liberty in the region must center on African voices and narratives. As George Ayittey puts it, "Africa's salvation lies in building upon its own indigenous institutions, not copying foreign systems."

Okediran agrees. An early challenge to the group's advocacy, he says, was to overcome the idea that it's merely proselytizing for Western theories. "I get accused of being a stooge of the West," he says. "They say, 'Oh, you've come with your neo-colonialism, you want to colonize us all over again.'"

To counter that, African Students for Liberty stopped distributing material by Western writers, and started sharing a collection of essays by authors from the continent instead. Called Voices for Africa, it includes essays such as "An African Intellectual's View on Libertarianism" and "Debunking the Myths of Free Enterprise in Africa." The tactic is working.

"This is a tipping point," says Okediran. "More young people are marching on with their ideas of liberty now than ever before. Whether they self-identify as libertarian or not, their choices—the arguments they make online—reflect libertarian ideals. The young people who believe these things now will go on to be journalists, businessmen, policy makers. And when we get into those positions of power, the belief systems we're building will begin to play out in policy."

It has already started. Recently, Okediran looked up his old chicken farm—curious, he said, to see if the operators had learned from past mistakes.

It's going private.

CORRECTION: The original version of this story described investors in Partnership for Schools in Liberia as Mark Zuckerberg and the Bill and Melinda Gates Foundation. They are Chan Zuckerberg Initiative and Bill Gates Investments.

10 Feb 13:54

California Food Nannies Shutter Startup for Home Cooks

by Baylen Linnekin

red tapeA dozen or so years ago, as my friend Dave was planning a move from Washington, D.C., to Philadelphia, he used the need to clean out his fridge before the move as an excuse to offer a half-empty jar of homemade kimchi for sale on Craigslist. While I don't think the kimchi sold, Dave's effort opened my eyes to the seemingly limitless possibilities of homemade online food sales.

The truth is that while those possibilities are limited theoretically only by imagination, they very often bump up in the real world against—to paraphrase Waylon Jennings—the limits of what the law will allow.

That truth was evident last week, when Bay Area food startup Josephine announced it will close its doors in March.

As I described in a Sacramento Bee op-ed in support of Josephine last year, the company launched nearly four years ago with a mission to provide cooks who are typically underrepresented in restaurant leadership—including women and immigrants—with a platform by which to sell home-cooked meals with their neighbors.

It's a cool idea. And it worked quite well for a time. That is, as I noted, until local health officials "sent cease-and-desist letters to several Josephine cooks."

Josephine responded by trying to work with lawmakers and regulators, pushing a bill in the state legislature that would provide some legal avenue for its cooks. Despite the fact that the bill is now moving through the California legislature, the company decided its passage would be too late for Josephine and its funders.

Josephine didn't have to die. The regulations that have made it impossible for the company to operate should have died instead. But its fate mimics that of other similar home-food startups. A similar New York-based startup, Umi Kitchen, flamed out last year after just four months of operations. I wrote an appreciation of Forage Underground Market, the inventive San Francisco food swap that was shuttered by California state and local health authorities, way back in 2012. And I predicted at the time the food underground movement was just beginning to blossom.

"From underground supper clubs and street lobstah pushas to nonprofit incubator kitchens like San Francisco's La Cocina and for-profit companies like Washington, D.C.'s Feastly that feature accomplished cooks serving meals in their own homes," I wrote, "entrepreneurs and social entrepreneurs are helping to re-write societal norms around food provisioning in communities around the country on what would appear to be an unprecedented scale."

Since that time, foods made by home cooks have indeed become normalized. For example, every state, save one, now has a cottage food law in place that allows home cooks to prepare and sell certain homemade foods. But cottage food laws typically only allow the sale of so-called "non-potentially hazardous" foods—or foods that are less likely to cause foodborne illnesses. That means foods such as jams, popcorn, fruit pies, spices, teas, and the like are generally allowed, while meat pies and Dave's kimchi, for example, are not.

A couple states, led by Wyoming, have adopted food freedom laws, which are far more welcoming toward and permissive of home cooks than are any cottage food laws.

Unfortunately, the proposed California law, AB 626, the Homemade Food Operations Act, is, though better than the status quo, still flawed. While the bill would allow sales by home cooks, such as those who've worked with Josephine, the law would still place meal and dollar caps on individual sellers, and require home inspections. Each of those requirements raises the specter of government intrusion into the home. It would also allow cities and counties, working together or separately, to continue to ban food sales under the law.

For now, Josephine co-founder Matt Jorgensen told me this week that he and his Josephine colleagues will pour their efforts into the C.O.O.K. Alliance—the acronym stands for "Creating Opportunities, Opening Kitchens"—launched by Josephine and allies to push for change in the state legislature.

"Our work at Josephine was to create more inclusive opportunities in the food industry by allowing home cooks to sell meals directly to their neighbors," Jorgenson tells me. "Although we've decided to wind down the business, we still have unwavering conviction in the momentum of this movement and the potential impact of legislative change."

07 Feb 13:35

Automation, or Perhaps Not (At Least for a While)

by admin

I thought this letter from Dan Hanson to Tyler Cowen was really thought provoking:

I wonder how many of the people making predictions about the future of truck drivers have ever ridden with one to see what they do?

One of the big failings of high-level analyses of future trends is that in general they either ignore or seriously underestimate the complexity of the job at a detailed level. Lots of jobs look simple or rote from a think tank or government office, but turn out to be quite complex when you dive into the details.

For example, truck drivers don’t just drive trucks. They also secure loads, including determining what to load first and last and how to tie it all down securely. They act as agents for the trunking company. They verify that what they are picking up is what is on the manifest. They are the early warning system for vehicle maintenance. They deal with the government and others at weighing stations. When sleeping in the cab, they act as security for the load. If the vehicle breaks down, they set up road flares and contact authorities. If the vehicle doesn’t handle correctly, the driver has to stop and analyze what’s wrong – blown tire, shifting load, whatever.

In addition, many truckers are sole proprietors who own their own trucks. This means they also do all the bookwork, preventative maintenance, taxes, etc. These people have local knowledge that is not easily transferable. They know the quirks of the routes, they have relationships with customers, they learn how best to navigate through certain areas, they understand how to optimize by splitting loads or arranging for return loads at their destination, etc. They also learn which customers pay promptly, which ones provide their loads in a way that’s easy to get on the truck, which ones generally have their paperwork in order, etc. Loading docks are not all equal. Some are very ad-hoc and require serious judgement to be able to manoever large trucks around them. Never underestimate the importance of local knowledge.

I’ve been working in automation for 20 years. When you see how hard it is to simply digitize a paper process inside a single plant (often a multi-year project), you start to roll your eyes at ivory tower claims of entire industries being totally transformed by automation in a few years. One thing I’ve learned is a fundamentally Hayekian insight: When it comes to large scale activities, nothing about change is easy, and top-down change generally fails. Just figuring out the requirements for computerizing a job is a laborious process full of potential errors. Many automation projects fail because the people at the high levels who plan them simply do not understand the needs of the people who have to live with the results.

Take factory automation. This is the simplest environment to automate, because factories are local, closed environments that can be modified to make things simpler. A lot of the activities that go on in a factory are extremely well defined and repetitive. Factory robots are readily available that can be trained to do just about anything physically a person can do. And yet, many factories have not automated simply because there are little details about how they work that are hard to define and automate, or because they aren’t organized enough in terms of information flow, paperwork, processes, etc. It can take a team of engineers many man years to just figure out exactly what a factory needs to do to make itself ready to be automated. Often that requires changes to the physical plant, digitization of manual processes, Statistical analysis of variance in output to determine where the process is not being defined correctly, etc.

A lot of pundits have a sense that automation is accelerating in replacing jobs. In fact, I predict it will slow down, because we have been picking the low hanging fruit first. That has given us an unrealistic idea of how hard it is to fully automate a job.

Based on this I can still think of some labor-saving, but not labor-eliminating, automation roles in trucking.

  • Convoying, allowing one driver to lead multiple additional automated trucks
  • Reduction in team driving.  Currently Federal rules (e.g. for rest breaks and maximum driving times) have created incentives for teams of two drivers to move priority freight that needs to be moving constantly and not parked while the driver sleeps.  Automation might allow one person plus the automated driver to keep trucks moving continuously and safely.

One thing not mentioned by Mr. Hanson is the role of regulation.  Safe automated trucks will likely exist LONG before Federal regulatory changes will occur to allow them much use.  This is not just because there is some delay with regulators getting comfortable with the safety aspects, but because affected groups with political pull who wish to keep the status quo will use safety concerns, real or imagined, to hold up the regulatory process.

If you think I am being too pessimistic, here is a story.  The typical steam engine of the 1930's needed a driver and a fireman -- the latter's job was to make sure the furnace was correctly fueled and operating well.  When diesel locomotives came along, one benefit among many was that the fireman was no longer needed.  Seeing this on the horizon, the fireman's union was ready to dig in their heals.  They actually, boldly, took the position NOT that a diesel locomotive needed a fireman, but that it should be required to have 2 firemen!  This was partially a subject for union negotiation, but in the dysfunctional world of railroad labor regulation, it also required some regulatory changes  (as the first industry with large workforces, the government took its first shot at labor regulation in a railroad-specific manner and the result was largely dysfunctional; fortunately for the rest of industry it did a better job with labor regulation later for everyone else).  It took years to totally eliminated fireman from diesel engines.  In fact, nearly every railroad labor saving technology like this (e.g. automatic brakes rather than men on roofs turning break wheels) led to regulatory foot-dagging that allowed the new technology but resisted the reduction in personnel.

04 Feb 06:38

Link: 'Myths of Human Genetics'

by John Hawks

As the semester is getting rolling, and I am teaching Mendelian genetics in two courses this week, I want to link again to the invaluable “Myths of Human Genetics” website, from John McDonald at the University of Delaware.

McDonald has collated a series of human traits that have been used, at one time or another, to teach Mendelian inheritance in humans. None of them are Mendelian traits in reality, and many of them are demonstrably non-genetic in their etiology.

Some traits, such as tongue rolling, were originally described as fitting a simple genetic model, but later research revealed them to be more complicated. Other traits were shown from the very beginning to not fit the simple genetic model, but somehow textbook authors decided to ignore this. A quick search in the standard reference on human genetics, Online Mendelian Inheritance in Man (OMIM), makes it clear that most of these traits do not fit the simple genetic model. It is an embarrassment to the field of biology education that textbooks and lab manuals continue to perpetuate these myths.

Tongue rolling, hitchhiker’s thumb, asparagus urine – they’re all there, along with many references and citations to studies that show what scientists actually know about their inheritance.

I’m introducing students to a few more anthroposcopic traits than usual this semester, and it’s interesting what they come in already “knowing” about the inheritance of various traits. Thanks, High School Biology!

Link: 'Myths of Human Genetics' was originally published by John Hawks at john hawks weblog on February 01, 2018.

04 Feb 05:38

Democracy and violence: the threat to South Africa’s elections

by Martin Plaut

Source: Institute of Commonwealth Studies

Feb 2, 2018 | Africa | 0 comments

by Martin Plaut, Senior Research Fellow, Institute of Commonwealth Studies

Violent politics in a violent society

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South African elections take place against a background of violence. The ruptures of the apartheid era have been carried over into post-apartheid society, leaving the country with a tragic reputation for beatings, murder and the abuse of women and children.

Police record some 650,000 victims of violence a year. As a recent headline put it: ‘South Africa is one of the most violent and unsafe countries in the world.’

There is little trust in the police and more than 500,000 private security guards are employed by firms and individuals at a cost of $3.7bn a year – more than twice the number of police officers.

This climate of violence is carried over into political life, yet outside of South Africa this is little understood. Most international observers assume the miracle of the reconciliation ushered in by Nelson Mandela and Archbishop Desmond Tutu with the ‘Rainbow Nation’ still prevails. Yet the evidence is that political murders and intimidation now disfigure South African politics. Violence and intimidation threaten the legitimacy of the 2019 general election. Unless these issues are recognised and confronted there is a risk that the democracy for which so much was sacrificed will be undermined.

Political killings

In June 2016 the Minister of Police, Nkosinathi Nhleko, announced that a special police task team had been established to investigate and try to prevent political killings. ‘We have noted with serious concern the incidents of killings, particularly where political figures are victims or where the killings are being linked to the upcoming local government. A situation like this cannot be allowed to continue, especially in the context of democracy,’ he said in a statement. A year later Minister Nhleko reported that the killings continued, as did the work of the ‘special task team’, which consisted of seven detectives, five crime intelligence officers, four members from the Hawks and 11 members from the taxi violence task team.

No details of any prosecutions by Police Minister Nhleko’s have been published, nor have the findings of the police ‘special task team’ been made public. This failure has left the public in the dark about the scale of the problem. The killings are worst in Kwa-Zulu Natal and the Province established the Moerane Commission to look into the issue. When it was announced the Premier of the province said: ‘Our records show that during 2016 to date, a total of 12 members of the African National Congress (ANC), 3 members of the National Freedom Party (NFP), 3 members of the Inkatha Freedom Party (IFP) and 2 members of the South African Communist Party (SACP) have been murdered.’ This is almost certainly an under-estimate. ENCA – a 24-hour South African television news broadcaster – produced a detailed report in which it stated that: ‘KwaZulu-Natal alone has recorded 450 political murders between 1994 and 2013. Fewer than one-in-ten of these murders saw successful convictions.’

What is clear from all the analysis is that until recently most violence and murders have been carried out within the ANC. This is changing: recently DA councillors have also been killed. The violence within the ANC is frequently part of a struggle for political influence; a means of gaining access to government contracts. Politics was largely (but by no means exclusively) driven by corruption. Opponents inside the party have been killed, since political power is frequently one of the few sure paths to wealth and influence in impoverished communities. Once in office, the politicians have access to privilege and resources to reward themselves, their families and those that depend upon them. It is this system of corruption and patronage that has fuelled the intra-ANC killings. This is accepted by the party. The ANC general secretary Gwede Mantashe was quoted as saying: ‘The reality is that selection of candidates for council is always a life-and-death issue.’

There is also a serious failure of the police to successfully investigate and prosecute those involved in these murders. Following a spate of political killings in 2016 the commentator Gareth van Onselen observed: ‘In every case, the police have said the motive for the killing is unknown, although politics has not been ruled out. In every case, no arrests have been reported and the police have asked the public to come forward with information.’ The analyst, Peter Bruce, calculated in 2014 that of the 120 political killings he uncovered since 2003, just 10% may have led to a conviction.

Three trends

Murder appears to have become an entrenched element of South African politics. Three trends are likely to increase the threat in the coming years.

1. The erosion of ANC support

The ANC began losing control of cities to the opposition in 2006 when it lost Cape Town to a coalition led by the Democratic Alliance (DA). The ANC’s response was less than democratic: attempting to use administrative means to dislodge the DA and when this failed, taking to the streets in an attempt to make Cape Town ‘ungovernable’. In 2009 the DA took the Western Cape, the first time the ANC had lost a province. The ANC escalated its attacks. In 2012 Mfuzo Zenzile, secretary of the ANC Youth League in the Cape Town region acknowledging that he had issued threats against the elected government: ‘Our memorandum said we’d make the city and province ungovernable if our demands were not met in seven days,’ he declared.

During the 2016 local government election President Jacob Zuma used some remarkable tactics in an attempt to win support. The president – promising that the ANC would retain power until the second coming of Christ – told voters that their ancestors would never forgive them if they voted against his party, and would bring them bad luck for the rest of their days. In traditional, rural communities this was not a prospect that voters would take lightly. President Zuma also predicted that without the ANC the country would descend into violence. Despite this incendiary language the ANC lost control of Tshwane, Nelson Mandela Bay and the Johannesburg area. It was a shock for the party from which it is still attempting to recover. Nor has the violence ended. In the Nelson Mandela Bay area there have been incidences of intimidation and death threats against DA councillors. These have been reported to the police and the ANC.

Ahead lie the 2019 general elections. If it becomes apparent that the ANC could actually lose its hold on power nationally, the party is likely to fracture, with commentators predicting an escalation of violence.

Jakkie Cilliers and Ciara Aucoin of the Institute for Security Studies ended a survey of the prospects in the coming years with this chilling conclusion: ‘South Africa is likely to experience significantly increased social instability in the next two years, mainly in the form of higher levels of violent protests, as the factional battles in the ANC plays out. On the current path violent protests will escalate, and we forecast particularly high levels of violence within the ANC in the run-up to the December 2017 National Conference as well as more general social and community violence in the run-up to the 2019 provincial and national elections.’ Van Onselen went further: ‘As the ANC implodes, as factionalism intensifies and as a culture of patronage and nepotism turns in on itself, it is not unreasonable to ask: how long until a senior member of the executive or the national government administration is assassinated?’

To be fair, these remarks were made before Cyril Ramaphosa replaced Jacob Zuma as President of the ANC (although not as President of the country) in December 2017. It is possible that Ramaphosa will steer the ANC away from this path. It is premature to conclude what his presidency of the party will achieve, but Ramaphosa’s reputation was tarnished for his involvement in the Marinkana massacre of mineworkers in August 2012, when police opened fire on strikers with automatic weapons. As a board member of the Lonmin mining company, Ramaphosa was involved in communications with the police during which he described the strikers as criminals and called for ‘concomitant action’ to be taken. While this is not to suggest that he wished the miners to be shot he must bear some responsibility for encouraging the police to end the strike. Given the long history of police brutality in the country it was hardly judicious to make such statements.

2. The ANC turns its internal violence outwards: towards its political rivals.

Opposition parties, including the Democratic Alliance, have already lost councillors, but murders are only the most obvious form of political intimidation. Threats to political opponents (whether inside or outside the party) have become endemic. The researcher, David Bruce, who reviewed previous elections, argued that one major form of intimidation is the disruption of meetings and events by those wishing to stifle political opposition. To support this argument Bruce interviewed a number of anonymous victims of political intimidation, largely those from parties being intimidated by the ANC. These are three examples which Bruce cites, two of intimidation against the DA and one against the Economic Freedom Fighters (EFF).

One interviewee from the DA in Mpumalanga described such an incident:

“So we would hold an event in a given community, let’s say 20,30, 40 community members would arrive, the ANC would make sure that they are at the same venue at the same time also with 20-30 people to come and just make noise and disrupt you so that you physically can’t speak because of the noise interference. I had one in Delmas two months ago where we had to cancel the entire days’s tour because the ANC literally followed us around with cars and the moment we stopped at a venue in a park somewhere, we started calling people together to come and talk to us, the ANC will come and surround us and prevent the people from talking to us.”

Another interviewee from the DA in the iLembe district north of Durban cited the following:

“Look, we actually had alerted the community and members of the DA that we were going to be having this gathering on Wednesday…when we arrived there were ANC members who gathered just down the road from where we were supposed to be. When we started with our meeting their group kept growing…and then as we wrapped our meeting they came to us singing and toyi-toying and they started bashing our cars [and] insulting people”.

The interviewee from the EFF reported the following:

“All EFF meetings have been disrupted, and they have been disrupted in this manner … So there is a pattern. … You have people who are wearing ANC T-shirts. In a huge turnout, we have never addressed less than two thousand people where we’ve been, without posters and all those things. All you say is ‘EFF is going to have a meeting and Julius is gonna address’. People come in huge numbers. And you see a group of seven ANC people wearing T-shirts, howling. And you ask them, ‘What is your problem, we want to have our meeting.’[They respond] ‘No, this is our community we cannot be removed. Freedom of this … blah blah blah.’If you are here then you must allow us to have our own meeting, and without you interfering with that.’ And they will become rowdy, even violent, even aggressive. In one instance one of the girls that was a part of the group literally hit my beret to the ground. I think they want to portray us as violent. That invites us to physically, you get what I mean, because if you hit my beret, obviously EFF members attach significance to the beret, and their leadership. So perhaps that’s their strategy to collapse our meetings and then the report is that we beat people up in meetings. So, that is what would happen. In Pretoria for instance, they were literally throwing things at us, bottles and what. And the police were useless.”

The evidence of intimidation, threats and murder is compelling. The political ‘space’ in which South Africans can act is has narrowed and (particularly in poorer communities) has sometimes been denied. The Constitution – for which its people fought so hard – guarantees political rights, but in some communities this is severely undermined.

3. The rise of the professional hitman

This has made South African politics increasingly dangerous. Professor Mark Shaw and Kim Thomas of the University of Cape Town produced a paper ‘The commercialisation of assassination: hits and contract killing in South Africa, 2000-2015.’ Thomas and Shaw used the media (including local, regional and national news) to build a database of individual hits or attempted hits over a 16-year period. They recorded just over 1 000 individual cases of assassination or attempted assassination. By no means all were political. ‘Where there is a cross-over between the involvement of state and criminal actors in perpetrating such violence, or cooperating in ways that facilitate violent outcomes, the position is particularly serious,’ says Shaw. ‘The result is a blurred distinction between the licit and the illicit, with a resulting replacement of trust with violence, or with the threat thereof.’

In his book Hit Men for Hire: Exposing South Africa’s Underworld, Mark Shaw explained the devastating toll murders have taken on the political system: ‘The system of assassinations is a vicious political cycle: it empowers those whose power comes from the gun, and disempowers those who rely on their standing and capacity for delivery. Unchecked in South Africa it will undermine the very foundations of the democratic system.’

It is the combination of these three trends: of an erosion of ANC support, of the externalisation of violence once used to settle scores within the ANC and of the rise of the professional hitman, that make future elections so dangerous. It would be a mistake to reach apocalyptic conclusions, but it would be equally irresponsible to ignore these warning signs.

Lessons from the 2014 general elections

South Africa has a reputation of holding free and fair elections. This is not an unfair assessment, but it is not entirely accurate.

Although the ANC, as a party, sometimes appears dormant when there is no election to be fought, it certainly conducts its election campaigns in an impressive fashion. Drawing on a legitimacy born out of a century of working for the rights of the African people, the party is capable of mobilising its core supporters across the country. Its support among the ethnic minorities has declined and its leadership is no longer peppered with white, coloured and Indian faces. Yet it continues to win the backing of the majority of the African population.

Anyone travelling beyond the white suburbs of Cape Town into the predominantly African suburb of Khayelitsha during the 2014 general election could not fail to be struck by the degree of ANC support. DA posters on the lampposts were few and far between. On election day itself, ANC T-shirts were ubiquitous in African areas, although the DA and other opposition parties also had supporters who wore their party’s colours. In part, this was because the ANC simply distributes more T-shirts than its opponents, as one report put it: ‘The African National Congress took its national election campaign to Botshabelo in the Free State on Sunday with ANC deputy president Cyril Ramaphosa conducting street visits. Ramaphosa left a trail of yellow T-shirts, walking down a street in L-section in Botshabelo, handing out shirts and greeting people.

This reflects the ANC’s vast spending power. No official statements are provided by any of the parties about their election budgets, but unofficial estimates by the DA suggested that the ANC outspent by its main rival four or five times. In part, this is the result of the ANC’s highly effective investment arm, Chancellor House, which channels funds into the party from government contracts. This diversion of public resources to fund the party has been repeatedly criticised. For example, in April 2014, on the eve of the election, it was revealed that the ANC had taken control of a supplier to the state electricity corporation, Eskom. Advocate Paul Hoffman, head of the Institute for Accountability in Southern Africa, described the deal as ‘illegal’ in terms of the Constitution. He warned that ‘this means money received from a state-owned entity will go straight into the coffers of the ANC…No other party has the temerity to enter into deals like this, where they are both [player and referee],’ said Hoffman.

1. Using and abusing state assets

The ANC has managed to retain power by using the resources of the state. This state of affairs was reflected in an editorial in the Mail & Guardian.

‘A reason why the ANC has managed its gravity-defying levitation, despite disillusionment within the ranks and derision outside them, is the power of incumbency. The ANC holds the goodies bag and has no hesitation dolling out taxpayer funded lollipops to keep the kiddies happily distracted… At the most crass level, it has been the distribution of state funded food parcels, blankets and T-shirts at ANC political rallies. The DA is taking the ANC and the SA Social Security Agency to court to halt this ‘grotesque and continued abuse’ of taxpayer funds.

A variation on this theme are newspaper advertisements and roadside billboards paid for by government departments, such as those ostensibly lauding the service achievements of the Gauteng provincial government, but dressed in ANC colours and using minimally tweaked ANC slogans. Such outrageous tactics, tried and tested by Zanu-PF in Zimbabwe, haven’t raised as much as an eyebrow at the Independent Electoral Commission (IEC).’

The ANC has displayed a ruthless disregard for the probity of office. It is a party that projects itself as the sole authentic representative of the entire people, rather than a mere political entity. As such it sees little need to distinguish between its interests and those of the nation as a whole. President Zuma suggested that the ANC should rule in perpetuity. This might be dismissed as soap-box hyperbole and hubris, but this would be a mistake; it is an attitude that has bred a sense of entitlement and resulted in a blatant disregard for the boundaries between party and state resources. There is considerable evidence for this assertion.

On 7th of April, with the election campaign well under way, the DA’s then leader, Helen Zille, held a press conference to highlight the issue. She drew the media’s attention to a range of abuses involving the use of government resources for party political advantage. Ms Zille described the government’s ‘Fetsa Tlala’ (End Hunger) programme as little more than a fig-leaf for ANC election campaigning and political patronage. The programme, with a budget of nearly R2 billion, included the distribution of tens of thousands of Fetsa Tlala t-shirts to the public. The t-shirt, printed in ANC colours had President Zuma’s face on the front, against a backdrop of an ANC flag. On the back were the words ‘We have a good story to tell’ – the ANC election slogan. She also raised the hiring of dozens of giant advertising hoardings in Gauteng, along major highways. Again, the adverts were in ANC colours and only slightly edited versions of the ANC’s election slogans. The DA calculated that the 51 advertising billboards in Gauteng were displayed at a cost of over R2-million a month, paid for by the province, not the party. Photographs of the billboards and examples of the ‘Fetsa Tlala’ t-shirts emblazoned with Jacob Zuma’s face were provided to the media.

The question that then arises is whether these tactics were efficacious. Hard evidence for this is, naturally, difficult to arrive at, but there are indications that it is. A survey by the University of Johannesburg’s Centre for Social Development in Africa (CSDA) revealed that just under half of voters were not aware that the social grants that they received were theirs by right.

‘The centre’s director, Leila Patel, said the finding was “worrying” as it meant that these voters — 49% of the respondents — were not aware of their rights. The potential for political abuse is large, given that just under 16-million grant beneficiaries are receiving social grants amounting to R121bn this year. Agriculture MEC in KwaZulu-Natal, Meshack Radebe, for example, said in April that “those who receive grants and are voting for the opposition are stealing from government”. He said that those who voted for another party should “stay away from the grant”, as if social grants were gifts from the ruling party. In fact, these grants are funded by taxes in order for the government to meet its constitutional obligation to provide social protection.

Summarising the study, Professor Yoland Sadie described the role of social grants in deciding voter behaviour as important, even if it was not decisive. In this regard the legacy of voter identification of political parties as historically representing ‘black’ or ‘white’ sections of the population was not insubstantial:

‘…social grants can provide an incentive for people to vote for the ANC, since a large proportion of grant-holders who support the party do not think that ‘they will continue receiving the grant when a new party comes to power’.

The combination of using state resources (via advertising hoardings, newspaper advertisements and food parcels at rallies) together with suggestions that grants and pensions might be at risk if a voter supported an opposition party, would appear to be effective weapons in the ANC’s armoury.

2. The role of the state broadcaster

The state broadcaster, the SABC, is the largest newsgathering organisation in the country, with three of the four national free-to-air TV stations, 18 regional and national radio stations. It also broadcasts in all South Africa’s 11 official languages, plus Khoisan tongues !Xu and Khwe. It also has a long and sad history of being the tool of the ruling party. Although modelled on the BBC, the apartheid government used the SABC as a tool of propaganda. The ANC has followed in their footsteps. This unfortunate fact was reflected in an article by Anton Harber, former Editor of the Mail & Guardian and Professor of Journalism at the University of the Witwatersrand. Entitled: “South Africa: SABC Is Key Weapon in ANC’s Arsenal”, Professor Harber concluded that the SABC was ‘one of the party’s most potent weapons’ since it has a far larger audience than any other media.

Broadcasting in all of South Africa’s major languages, the SABC can reach the parts others simply cannot. ‘That is why the ANC has so much to say about the inadequacies of the print media, but is so silent on problems at the SABC, which can be relied on to block opposition adverts, play down Nkandla and pursue the ANC narrative. It is why it was prepared to lend R1.5bn to the SABC and give only a few million for the Media Development and Diversity Agency to support community media.’ This is not the first time that the ANC’s use of the SABC has been highlighted. Susan Booysen suggested that the party has used the broadcaster to bolster its image in previous elections. ‘The ANC expertly uses the public broadcaster, the South African Broadcasting Corporation (SABC), to feed supporting information, in particular in terms of government activities and statements by top-government figures in the run-up to elections.’

Concerns about the SABC falls into two categories: bias and political advertising. The question of bias has been raised by many parties. For example, the Congress of the People (COPE) accused the chair of the SABC, Ellen Tshabalala, of encouraging an audience to vote for the ANC. ‘We have always suspected that the SABC has the ANC’s back (sic), and our suspicions have now been confirmed without a shadow of doubt,’ the statement read. Similarly, the Pan African Congress youth wing accused the SABC of being ‘the mouthpiece of the ANC.’

More serious were the accusations of censorship against the SABC for its refusal to air (or ‘flight’ as South Africans say) the party political broadcasts of the opposition parties. The DA was most severely affected, but it was not alone. The Economic Freedom Fights of Julius Malema complained of the same treatment. The DA’s commercial was refused permission twice by the SABC. The broadcaster claimed that the advert might incite violence against the police, used false information and attacked another party. Media Monitoring Africa scrutinised the arguments, rebutting them all. The issue became something of a cause celebre in the media. One commentator erupted in anger, declaring: ‘Hlaudi,’ (Hlaudi Motsoening, the SABC Chief Operating Officer) ‘play the damn commercial!’ The SABC finally relented and broadcast the material, but considerable damage had already been done. In any election timing is critical and days were lost as the lawyers wrangled over the complaints. These incidents did little to enhance the SABC’s reputation.

3. Violence and intimidation

The Southern African Observers Mission [SEOM] report published after the vote noted some violence during the May 2014 election, but suggested that it was inconsequential.

‘SEOM observed that electoral campaigns were generally peaceful. Contesting parties demonstrated political tolerance and maturity. However, there were incidents of inflammatory statements made by some parties that were inconsistent with Section 99 of the Electoral Code of Conduct. SEOM also noted that there were sporadic incidents of violence and intimidation during campaigns in some provinces. Some of these incidents were related to service delivery protests and industrial actions.’

It is difficult to reconcile this bland and frankly complacent statement with the lengthy and comprehensive report produced just before the election by David Bruce, cited earlier. As he argued, poverty renders many people susceptible to political manipulation. ‘As this report shows, people’s economic vulnerability is an important factor exploited by those involved in intimidation in South Africa. The reliance of people on government grants, or government employment programmes, may create hesitancy about the possible risks of being identified as a supporter of a party other than the ruling party.’ This point has been outlined above but CASE provided much greater detail concerning the range of measures used to convince the poor to support the ANC.

The report also went into considerable detail about the means of more overt measures the ANC adopted. These included everything from parking vans outside meetings with loudspeakers blaring to make discussion and debate impossible, to straightforward attacks and beatings. All were in contravention of the Code of Conduct published by the Electoral Commission which expressly forbids any ‘language or act’ that provokes violence or results in the ‘intimidation of candidates, members of parties, representatives or supporters of parties or candidates or voters.’

Even when there was no direct physical violence, the report frequently found threats and intimidation of political activists during campaigning: ‘Say for example you would go on a Saturday afternoon and we would conduct door-to-door visits and all of a sudden you would just see a big group of ANC supporters chasing you away and say ‘you do not belong in this community, go away’ and literally threatening our activists and toyi-toyiing and they would be threatened with their lives that they gonna kill you, and they would be doing signs like this [indicates throat cutting motion]. So it is literally threats you know that we will kill you if you don’t go out of this community.’

The CASE report makes it clear that while the ANC is not the only party to engage in these crimes and misdemeanours it is the main perpetrator. As David Bruce concluded: ‘…the research overwhelmingly pointed to the ANC as the primary source of intimidation in South Africa.’

4. Election day and the Electoral Commission

The former chair of the Electoral Commission, Pansy Tlakula, made it plain that electioneering was forbidden on the 7th of May – the day of the election itself. ‘No political events can take place on voting day,’ she told reporters. ‘Campaigning finished at midnight last night.’ Having travelled around the townships surrounding Cape Town throughout election day it was evident that this ruling was extensively and openly flouted.

As the day drew to a close, cavalcades of cars, with loudspeakers blaring out party songs and supporters waving flags from the windows, could be seen touring up and down the streets. Outside polling stations crowds, some more than a hundred strong, dressed in party colours and waving ANC flags, could be seen dancing less than a metre from the long lines of men and women waiting patiently to cast their votes. When this was drawn to the attention of the police and the representatives of the Electoral Commission at the stations they either shrugged their shoulders or said they did not have the resources to deal with these violations of the regulations.

The Electoral Commission appears to have little appetite for tackling these transgressions. The Commission also refused to intervene in other election related issues, including the bitter debate between the opposition parties and the SABC. There is a suspicion among the opposition that the Commission is less than equitable in its treatment of their parties or their members. This is reflected in the interviews undertaken for the CASE report, which suggested that the Commission was biased in favour of the ANC because of the partisan nature of the civil servants that it uses as its representatives at polling stations. This is the view of a member of the Inkatha Freedom Party.

‘We are not happy as the IFP about the fact that IEC is using teachers as you know presiding officers, because teachers belong to SADTU, because SADTU is a strategic partner of the ANC. Each time there is going to be an election SADTU goes public to say that they are committed to ensuring that the ANC wins the elections. Now if you use such people to manage the processes of the elections then those processes are bound to actually attract question marks from other people.’

Another interviewee, this time from COPE, had this to say: ‘Remember most of them are civil servants and largely teachers, who are members of SADTU. With each election, SADTU declares its unwavering support for the ANC. Whilst he or she is employed by the IEC, to deliver impartial elections, on the other hand they’ve got a mandate from their trade union, which is an ally of the ANC, to deliver votes for the ANC.’

The Commission appears to take a narrow interpretation of its responsibilities, only acting to ensure that what happens directly within the polling stations and at the counting centres is free and fair. This, despite its mandate from the Constitution, which calls for the Electoral Commission to ‘manage’ the elections in accordance with national legislation and to ‘ensure that those elections are free and fair.’ It would not be impossible for the Commission to use this Constitutional requirement to act more robustly to ensure that the environment in which the elections take place is far more conducive to the unrestricted expression of the will of the people of South Africa; a right for which they fought so hard.

The 2014 election attracted little attention from the rest of the world. The African Union and Southern African nations sent observers; the European Union (in a break from past practice) did not. Reportage in the international media was slight and not very revealing. This is unfortunate since South Africa, for all its imperfections, remains one of a handful of real democracies in Africa. It is worrying that there is such apparent complacency in the international community when, as indicated above, there are real flaws in the democratic process. There is no doubt that the ANC would have won a substantial victory even if there had been an entirely clean election, but the election was flawed and should be recognised as such. As the CASE report concluded: ‘Though it is not necessarily a feature of life in all poorer communities the research in this report indicates that intimidation and other forms of manipulation are a systemic feature of political life in South Africa.’

Looking ahead to the 2019 election

What can be done to ensure that the democratic rights won in 1994, and enshrined in the Constitution, are not eroded? This is not a question that only concerns citizens of South Africa. The future of the whole region is intimately linked to the political economy of the country. The international community played a major part in ending apartheid and has an interest in the country’s citizens continuing to exercise their rights and freedoms in a vibrant democracy.

The African Union, Commonwealth and the United Nations all have an interest in encouraging and supporting the people of South Africa in this regard. It is not enough to pay lip-service to this: as the evidence produced in this article demonstrates, there are serious concerns about the way in which violence and murder have become an integral part of the political process. As worrying are the trends exhibited in the run-up to the 2014 election. These showed how, in the weeks and months before the voting took place, the ANC used state resources to bolster its electoral chances, while dominating the state run media. On election day the Independent Election Commission failed to ensure that its ruling prohibiting campaigning was adhered to. The police stood by while clear violations were perpetrated.

In the circumstances it is evident that the international community should do all it can to support South Africans in their desire to hold an election in 2019 that truly reflects their views. To ensure that this takes place will require all those concerned to play their part. This should include the African Union and the Southern African Development Community, United Nations and the Commonwealth. Other international actors, including the Carter Center, Friedrich Naumann Foundation, Rosa Luxemburg Foundation and the Westminster Foundation have important contributions to make. All can support the Independent Election Commission in fulfilling its task, and backing the many civic society organisations that are such an integral part of South African political life. The South African media, which has done as much as anyone to hold the government to account, deserves to be supported.

International observers need to be deployed to monitor the election well before the election date. Stephen Chan, who was involved in some of the earliest African election monitoring, has argued that this is essential. ‘An advance team of experts – or those briefed on the constitutional, electoral, and political affairs of the country – should be in place as a reconnaissance unit at least a month before polling day. And that team must be energetic and mobile, traversing the country. Observation is no country for old men, nor old women, the unfit, timorous or easily frightened.’ Professor Chan goes on to suggest that governments have become adept at holding elections that are rigged well before polling day. He suggests that observers must be aware of the complex and nuanced ways in which African elections are abused and be prepared to provide what he calls ‘a more extended and sophisticated presence during and after campaigning, including regarding the counting of votes and the testing of the count.’

Together these measures should help ensure that the 2019 election is an improvement on the election held five years earlier. In the end this is – of course – the responsibility of the South African people, but the world has too much invested in the country’s future to allow its precious democracy to be undermined.

04 Feb 04:43

FDA Begins Implementing Awful Food-Safety Law

by Baylen Linnekin

America's farmers are on the alert this week as key provisions of the Food Safety Modernization Act (FSMA) begin to take effect. The law, which is being rolled out by the Food and Drug Administration (FDA) over several years, could have far-reaching implications for who grows—and doesn't grow—the food you buy.

When Congress passed FSMA (pronounced FIZZ-muh) in late 2010—President Obama signed it into law during the first days of 2011—supporters touted the law as the most sweeping update of our nation's food-safety laws in more than 75 years.

But both the law and its implementation are controversial. Many small farmers feared—and still fear—that the new regulations and high costs of complying with the law could squeeze them out of business. As evidence, they point to the giant farms and food producers who supported the law.

While FSMA contains several provisions, one key facet of the law requires the FDA to "establish science-based minimum standards for the safe production and harvesting of fruits and vegetables."

Bigger farms must comply sooner. Hence, as of this week, the produce rules apply only to America's largest farms. That means that this year, farms with more than $500,000 in sales will have to comply with FSMA. Next year, the rules will also cover farms with between $250,000 and $500,000 in sales. And in 2020, the rules will cover very small farms—those with revenue between $25,000 and $250,000.

While this gradual implementation is likely better for small farmers than the alternative—being forced to comply right now—that hasn't allayed their fears.

Many of those fears pertain to compliance costs. The relative compliance costs for small and large farms are stark. As I've noted previously, the FDA estimates FSMA will cost America's small farms about $13,000 each per year and its larger farms about $30,000 per year. That means that for some small farmers, compliance costs could eat more than half of their revenue. For larger farms, compliance costs will amount to less than one percent of revenue.

As I detail in my book, Biting the Hands that Feed Us: How Fewer, Smarter Laws Would Make Our Food System More Sustainable, small farmers' concerns about that part of the law have been legion.

This week, one Maine farmer shared his concerns about the law. Farmer Goran Johanson, while embracing some of what FSMA requires, says the law will place "a huge financial burden on us as farmers." He worries "there could potentially be a lot of infrastructure needs necessary" at his farm, including that he'll have to scrape together funds "to build a new produce packing house that will have washable surfaces on everything, which is an expensive investment."

Just how much will FSMA benefit consumers? According to the FDA itself, not much.

Even if FSMA is implemented perfectly, the law won't make our food supply much safer. That's according to the FDA's best-case estimates which, I wrote in 2014, would mean "a paltry reduction in cases of foodborne illness of between 3.7 percent and 5.4 percent." Again, that's the best-case scenario. A more likely outcome, I estimated, also using FDA data, is that foodborne illness cases might drop by around 2.6 percent.

Why such little impact? As I detailed in 2015, FDA regulations are only capable of preventing, at most, "only one out of every five cases... of foodborne illness." That's because four of every five cases of foodborne illness can be traced to causes that have nothing to do with foods regulated by the FDA.

Congress never should have passed a law with such high costs and such little return.

Around the country, state agriculture departments and agricultural extension agents are working feverishly to help local farmers prepare to comply with the regulations. In five years, when there are even fewer small farmers than there are today, we'll be able to look back to this week as the beginning of that sad and unnecessary end.

03 Feb 02:30

Tipping point 10 years on: Who won the Armstrong-Gore “bet” on the climate?

by admin

The Challenge

In 2007, University of Pennsylvania Professor J. Scott Armstrong challenged former U.S. Vice President Albert Gore to a bet on what would happen to global average temperatures over the next 10 years. Professor Armstrong’s challenge was in response to Mr. Gore’s warning of a looming dangerous “tipping point” in temperatures. But when even scientists who are expert in a field make predictions about complex situation without using scientific forecasting methods, their forecasts have no value. The proposed $10,000 bet, then, was intended to draw attention to the need to assess the predictive validity of climate forecasts in an objective manner.

Emails to Mr. Gore were unproductive: after several attempts at engagement, his staff informed Professor Armstrong that Mr. Gore did not take bets. The important question of whether public policies should be based on the alarming projections had not gone away, however, and so Armstrong commissioned theclimatebet.com site to track how the bet would have turned out had Gore accepted.

At the time of the challenge, Mr. Gore had been warning that climate was warming at such a rate that large public expenditures were needed in great haste in order to prevent disaster. His book Assault on Reason—published in April 2007—stated on p. 204: “Many scientists are now warning that we are moving closer to several ‘tipping points’ that could – within as little as ten years – make it impossible for us to avoid irretrievable damage of the planet’s habitability for human civilization.”

Formulating The Climate Bet

Mr. Gore did not quantify his dangerous warming forecast, and so the “business as usual” projection provided by the U.N. Intergovernmental Panel on Climate Change’s Third Assessment Report in 2001 was used to represent his forecast. Using the IPCC projection of 3°C per-century warming favored Mr. Gore’s side of the bet because it was considerably less dramatic than the “tipping point” claims he was articulating and some of the IPCC’s own more extreme projections.

Professor Armstrong’s side of the bet was that the global average temperature would not change. The no-change forecast is consistent with a statement in the body of the aforementioned IPCC technical report. The report stated, “In climate research and modeling, we should recognize that we are dealing with a coupled non-linear chaotic system, and therefore that the long-term prediction of future climate states is not possible.” In other words, forecasting long-term trends in climate is impossible and, by implication, forecasting long-term changes in global mean temperatures is impossible.

The IPCC statement is also consistent with Green, Armstrong and Soon’s (2009) conclusion that the forecast of no-change in global temperatures over the long term would be hard to beat in terms of accuracy, even when applied to the U.K. Met Office Hadley Centre’s questionable annual average temperature data—based on adjusted thermometer readings from selected sites from 1850—that is used by the IPCC. Green, Armstrong and Soon found that no-change forecasts were so accurate for practical purposes—e.g., average errors of only +/- 0.24°C for 50-year-ahead forecasts—that there would be no point in trying to do better.

The IPCC 3°C-per-century projection not only ignored their own authors’ conclusion about the inability to predict long-term trends, their procedures violated 72 of 89 relevant forecasting principles (Green and Armstrong 2007). As a consequence, there is no reason to expect the IPCC dangerous warming projection to be accurate over the long term, and thus no good reason for using it as the basis for policy.

Global temperatures have always varied on all time scales, however, so it was quite possible that Armstrong would lose a ten-year bet when temperatures have commonly drifted up or down by 0.3°C over ten-year periods in the past. A 150-year simulation of the bet suggested that his chance of winning was only about 70%.

Determining the Winner

In the end, the bet was offered, and monitored, on the basis of satellite temperature data from the University of Alabama at Huntsville (UAH). In contrast to surface data, the lower troposphere satellite data covers the whole Earth, is fully disclosed, and is not contaminated by poor maintenance and location of weather stations, changes from mercury to electronic measurement, and unexplained adjustments.

The cumulative absolute error (measure 1 in the table) was the key criterion for assessing accuracy. That measure has been tested and shown to be the best way to compare the accuracy of forecasts from different forecasting methods (Armstrong and Collopy 1992). By that measure, the no-change forecast reduced forecast errors by 12% compared to the IPCC dangerous warming projection. Forecasting models that cannot provide forecasts that are more accurate than the no-change forecast have no practical value.

The finding is consistent with Green and Armstrong’s 2014 analyses that compared the predictive validity of the no-change and IPCC forecasts over different time periods. The Loehle AD16 to 1935 temperature series was used to compare the accuracy of the global warming, global cooling, and no change forecasts over horizons from one to 100 years ahead; the no-change hypothesis was much more accurate than the global cooling hypothesis of 1°C-per-century cooling, which, in turn, was much more accurate than the global warming hypothesis of 3°C-per-century warming.

Alternative Measures of Winning

There are other ways that one might assess accuracy, especially since the bet was tracked each month, but the outcome is clear: there was no dangerous “tipping point” over the ten-year period. Global temperatures fell well within the range of natural variation. Seven alternative measures are presented in the table below so that readers can make their own assessments.

See the Golden Rule of Forecasting, here.

The second and third measures in the table provide measures of bias in the forecasts. By both measures, the no-change forecast is substantially (18% and 79%) less biased.

Another way to look at bias is shown in the chart: the blue shading indicates the difference between the Armstrong/no-change forecast and the actual temperature when the forecast was too warm, and the red shading indicates the difference between the Gore/IPCC projection and the actual temperature when the projection was too cold. A perfectly unbiased forecast would have 50% over- and 50% under-forecast errors. The sum of the Armstrong/no-change over-forecast-errors was 41% of the corresponding total absolute error, whereas the sum of the Gore/IPCC under-forecast-errors was only 14%. In other words, the Armstrong/no-change model produced forecasts that were close to unbiassed over the 10 year period, whereas the Gore/IPCC model projection was grossly biassed to forecast too warm, to the extent that the Gore/IPCC error from forecasting too warm was six times larger than the error from forecasting too cool.

How would planners who had relied on the official IPCC projection have fared? Looking again at the chart, planners would have expected “extra” warmth represented by the area of the triangle between the red IPCC line and the green no-change line (19.8). The extra warmth actually experienced over the period is represented by the area between the black actual temperature line and the green line: the area above the green no-change line, less the area below the no-change line (3.47). In other words, planners relying on the IPCC projection would have experienced less than 18% of the extra warmth that they had planned for.

Those who insist on looking for a trend in the decade of seesawing temperatures will find no support for either a “tipping point,” or the IPCC’s dangerous warming trend projection, in the best-fit line, which runs at a rate of little more than 1°C per-century[i]. As the footnote to the table explains, the fitted ordinary least squares (OLS) trend from the 2007 annual average base was 1.53°C per-century, and the least absolute deviation fitted (LAD) trend was 1.17°C per-century. When the bet forecasts are assessed against the OLS trend, the Gore/IPCC 3°C per-century projection is slightly closer (measure 5 in the table), but the Armstrong/no-change forecast is 44% closer to the more relevant LAD trend (measure 6). (Why would decision makers want to minimize squared errors?) Moreover, the trend line for the period of the bet was closer to no-change than was the trend over the entire UAH temperature anomaly series to the end of 2017.

The arbitrariness of fitting a trend—by whatever method—to such a series is reinforced by the fact that if the bet had been for five years, rather than 10, the fitted trend would have been negative: -1.13°C per century (LAD), or -1.61°C per century (OLS). Note also that on 10 February 2007, Sir Richard Branson was accompanied by Mr. Gore when he stated that the “world may already have crossed a ‘tipping point’”, and so one might ask whether the temperature at the end of the bet was dramatically higher that it was then, when the January 2007 UAH figure of 0.43°C had just been released. The answer is no: the December 2017 figure was lower at 0.41°C.

The Future of The Climate Bet

Longer is better for assessing climate forecasts, and so theclimatebet.com site will monitor the “bet” in line with Scott Armstrong’s offer to extend the challenge for another ten years by sticking with the original 2007 annual average global temperature as the starting point. Extending the bet is intended to help further publicize the important role of scientific validation of forecasts that influence public policy. Policymakers should reject forecasts that fail to reduce errors compared to an appropriate no-change benchmark.

Kesten C. Green
26 January, 2018
5 February, 2018 (extended analysis)

 

[i] Technical note to facilitate replication: The Climate Bet was framed in terms of what would happen to temperatures relative to the 2007 average, the year in which Mr. Gore warned of a “tipping point” and Professor Armstrong tried to get him to engage in a bet. Logically, then, if one insists on fitting a line through such a volatile time series, the starting point should represent the situation at the time the claim (tipping point) and challenge (offer of bet were made). The Gore tipping point claim was made in early 2007, so one could make a case for fitting trend lines with an origin at .43C (January 2007) but, given that discussions proceeded over the 2007 year and that monthly temperatures are so volatile, the 2007 average was chosen as the base for the bet; hence, also, as the value of Professor Armstrong’s no-change forecast, and the origin for trend line fitting. Given that the data are monthly and the origin was an annual average, lines are fitted with the origin located in mid-2007. A close look at the chart reveals that the red IPCC/Gore +3°C per century line is also projected on that basis: it is slightly above the green no-trend/2007-average line at the beginning of 2008.

02 Feb 14:17

Lawsuit Exposes Internet Giant’s Internal Culture of Intolerance

by Gideon Scopes

James Damore, the former Google engineer who was fired last summer after authoring a document questioning the company’s diversity policies, has filed a lawsuit against the company. In a 161-page complaint, he does far more than challenge his firing and accuses Google of systemic discrimination against and harassment of white and male employees, as well as of violating a California state law that prohibits employers from discriminating on the basis of an employee’s political persuasion. He has joined together with another engineer by the name of David Gudeman who was also fired after he expressed politically incorrect views. Together, the two of them are requesting that their case be treated as a class action on behalf of all employees who have faced similar treatment at the hands of the Internet giant. The charges that they make are broad and far-reaching, but they are not asking that their claims be taken on faith alone. More than half of the complaint is taken up by an 87-page-long exhibit consisting of screenshots from internal systems used by Google employees to communicate. These screenshots present a stunning display of unprofessional behavior not just by rank-and-file employees but managers and even a senior vice president, including overt discrimination, prejudice on the basis of race and gender, conflation of dissenting political views with racism and sexism, punishment of those who asked questions about what behavior was permitted, endorsement of politically motivated violence, and even an attack on the very notion of truth itself.

The complaint alleges that Google’s affirmative action programs went beyond merely setting targets and conducting outreach events restricted to certain demographics. At a “Diversity Team Kickoff” event, a director announced plans “to freeze headcount so that teams could find diversity candidates to help fill the empty roles,” with “diversity candidates” being defined to mean “women and non-Caucasian individuals” (Complaint 46). In other words, Google saw fit to stop hiring white men at all for certain teams until the desired numbers of favored groups were met. Not only did Google practice this discrimination itself, but it also attempted to use its power in the industry to coerce other companies into doing the same, with one manager instructing his employees as follows:

Next time you get invited to speak at a conference, especially if you’re a white male – ask the organizer to confirm you’re the only white male on the panel / in the speaker lineup. If not, say you are honored, but must decline, and give the reason. And because you are at Google, guess what – they’re going to change the panel for you. You’ll feel bad about inconveniencing them. But not that bad. When the cheesy white male executive is in the “green room” and glaring at you because he was bounced for the panel in favor of a woman on his team, you’ll feel pretty damn smug. Or you won’t: you’ll feel bad that you might have put her in a tough spot, and you’ll go above and beyond to make good with the schmucky senior dude (Complaint 42).

Smug indeed. The willingness to displace all of the other people on a panel, people who presumably worked hard to earn those speaking opportunities, displays a level of ego that is striking.

Despite these glaring acts of discrimination, the social justice activists within the company are still not satisfied and are pushing for ever-more-extreme forms of affirmative action. Proposals have included adding points to the interview scores of favored candidates (Exhibit 25), penalizing senior vice presidents whose teams didn’t hire the desired demographics by taking away half of their equity compensation (Exhibit 25), and even an outright “moratorium on hiring white cis heterosexual abled men who aren’t abuse survivors” (Exhibit 83). One manager proposed an experiment in discrimination:

I think only women and [people of color] should be allowed to make hiring decisions at google [sic] for a year. And/or randomly assign a third of each position type to only be hired by women, [people of color], or unselected type. Look at the resulting data. Google likes experiments? Do an experiment (Exhibit 25).

Apparently, it never occurred to her that her proposal is a flagrant violation of federal civil rights laws. Another manager saw fit to take matters into his own hands, declaring that he would begin each interview with “a discussion of experience with diversity” and only proceed to the technical questions that assess a candidate’s qualifications for the job once he was satisfied that the candidate had met his ideological litmus test (Exhibit 25).

This tendency toward discrimination was accompanied by numerous instances of prejudice directed at white men. The complaint alleges that “the presence of Caucasians and males was mocked with ‘boos’ during company-wide weekly meetings” by individuals who included “high-level managers…who were responsible for hundreds, if not thousands, or hiring and firing decisions” (Complaint 3). One employee posted to a forum, “If you put a group of 40-something white men in a room together and tell them to come up with something creative or innovative, they’ll come back and tell you how enjoyable the process was, and how they want to do it again, but they come up with fuck-all as a result!” (Complaint 43) This claim is, of course, demonstrably false as evidenced by the many inventions and discoveries contributed to humanity by white men in their forties. When another employee complained to human resources that the post constituted harassment on the grounds of race, gender, and age, all of which are protected classes under federal law, Google responded that the post was acceptable because its purpose was “to highlight that it is helpful to have diverse perspective” (Complaint 43). It seems that Google’s definition of diversity does not require respecting the basic human dignity of all people.

These are far from the only instances of prejudice documented in the complaint. Employees mocked those who expressed concerns about unfairness to those passed over by affirmative action, declaring that they “already have all the advantages in the world” (Complaint 40) and that “it’s not sexism / racism if it’s against males / whites” (Exhibit 76). Such concerns were dismissed as “devil’s-advocate troll-bullshit” (Complaint 41). One employee declared all white men to be part of the problem: “By being a white male, you are in a privileged class that is actively harmful to others, whether you like it or not. So, no, you really actually don’t get to complain about your right to an opinion” (Exhibit 53). Another pontificated, “The only way we ‘move past color’ in America is for white people to shut up and listen” (Exhibit 47). Slurs casually flung around included “whitesplaining” (Exhibit 58), “white fragility” (Exhibit 59), “white tears” (Exhibit 85), “toxic whiteness” (Exhibit 61), and of course “mansplaining” (Exhibit 74). In some cases, the slurs were sexually explicit, with one employee declaring that “being a computer programmer is even sweeter if you have a dick” (Exhibit 84) and another congratulating anyone who disagreed with him on his “white penis” (Exhibit 55). One employee compared the reaction of “straight white men” to her use of the word “privilege” to “vampires being fed a garlic tart at high noon” (Exhibit 52). A manager advised his subordinates, “It’s good to be periodically reminded, given how popular Dilbert is amongst us geek-folk, that the creator of Dilbert is…a paranoid sexist dickbag” (Exhibit 50). Another manager challenged others to “Stop Reading White Straight, Cis Male Authors for One Year” (Exhibit 51).

The intolerance on display was not just racial and sexual but also political. One employee openly declared, “I personally believe that a majority of self-identified ‘Republicans’ can be placed in the bucket category of idiots (or uneducated)” (Exhibit 3). Another proclaimed his hostility, “If you’re concerned about discussing conservative values at work, maybe you should be. Maybe that’s a feature, and not a bug” (Exhibit 2). An employee who sympathized with his heterodox colleagues recounted, “I have lost count of the times at Google…people tell me privately that they cannot admit their voting choice if they are Republican because they fear how other Googlers will react” (Exhibit 11).

Conservative ideology was treated by many as being the equivalent of racism and sexism: “The choice to be a Republican is the choice to align yourself with a white supremacist, xenophobic regime” (Exhibit 1). Another employee declared that “one of two major American political party [sic] has adopted white supremacy as a political platform” (Exhibit 1). When one employee discussed “Conservative Christianity” as being among “legitimate world views,” another responded, “I admire your tolerance, but pairing those two phrases still sounds like an oxymoron to me” (Exhibit 1).

The vilest treatment, however, was reserved for those who supported the candidacy of Donald Trump. One Trump voter at the company recounted his experience following the election:

As a Republican at Google and a person who voted for Trump, I already knew I was in the minority. What I didn’t foresee is the fact that I would have to come into work yesterday and hear my cube mates ridicule and mock people like myself that voted for Trump, and then have that behavior reinforced by senior leaders who sent emails condoning the beratement of Republicans (Exhibit 14).

When one employee urged others to show respect and try to understand one another even if they chose different candidates, another replied:

I mean no disrespect, but statements like this come off rather condescending IMO when the rule of law has been killing blackfolks for generations and is now well documented, and part of the platform of the man who was elected was that law would be harder on blackfolk. This sort of statement smells strongly of privilege that many people in the US do not have (Exhibit 15).

The notion that it would make a difference if someone voted for Trump for reasons other than his incendiary rhetoric was explicitly repudiated:

Unfortunately, when you vote for or nominate a candidate, you vote for the entire package. You can’t support Donald Trump without also supporting his racism, misogyny, homophobia, and transphobia. Or even worse, if you vote for Donald Trump because of his economic policy or because you feel the other party is corrupt, then what you’re saying is that economics is more important than the safety of your peers (Exhibit 31).

In this climate of little tolerance for dissent, it is understandable that employees whose views differed from the prevailing opinions might wish to ascertain exactly what the boundaries were. However, the complaint alleges that employees were punished for merely asking such questions. Two such questions leading to punishment were as follows:

Are you insinuating that it is a “jerk move” to share your opinion about a political blog post if 98% of Googlers disagree with you, but it’s OK to share your opinion about a political blog post if 98% of Googlers agree with you? If so, how do you reconcile this view with [Senior Vice President Urs Hölzle’s] request to help make Google a supportive place for minorities of any kind? (Complaint 24)

Many Googlers have claimed that it is “harassment” or some other rule violation to critique articles that push the Social Justice agenda. A few Googlers have openly called for others to be fired over it. Do you support this viewpoint, and if so, can we add a clear statement of banned opinions to the employee handbook so that everybody knows what the ground rules are? (Complaint 24)

One employee responded to the latter question, saying, “yes, the posting of this kind of ‘critique’ – and in fact, the posing of this very question itself – directly contributes to the creation of a hostile work environment for women at this company” (Exhibit 21). In doing so, he seems to be engaging in what the equity feminist Christina Hoff Sommers has termed “fainting couch feminism,” treating women as too fragile to be exposed to an opinion with which they might disagree and thereby reinforcing many of the stereotypes that earlier generations of feminists fought so hard to erase.1

Some of the behavior on display at Google went beyond hate speech into the realm of outright endorsements of politically motivated violence. One employee proclaimed:

This is why I refuse to condemn rioters or punching Nazis. This is targeted, political, defensive violence. It’s what happens when you leave otherwise nonviolent people with no other choice, and it’s what happens when a movement ignores everything else: facts, morality, empathy, justice, fairness, whatever…

So, let some black bloc guy punch a Nazi, and let the world point and laugh. Let it be symbolic and let all the Nazis fear. And then repeat after me: this is not normal. This is not normal (Exhibit 39).

Others join in the calls for violence: “If you subscribe to an ideology that, as a matter of fact, wants to kill people because they are different – and has, by the millions – then you deserve being punched in the face. Repeatedly” (Exhibit 40). One employee declared that “we are at a point where the dialogue we need to be having with these people is ‘if you keep talking about this shit, I [sic] will hurt you’” and that “the only way to change people’s minds is to make being a fucking nazi [sic] have consequences” (Exhibit 40). Another casually announced, “Also in the mood to punch Nazis, but none within punching distance” (Exhibit 41). For one employee, simply being a male engineer was enough to justify the desire for violence: “Every time I’m reminded of the travails of Kathy Sierra it makes me want to pound a brogrammer in the face” (Exhibit 48). Another employee announced his participation in #TheIdesofTrump, a movement to protest Trump on the date of the assassination of Julius Caesar (Exhibit 81).

Yet perhaps the most shocking revelation in the complaint was the declaration by Senior Vice President Urs Hölzle that the scientific method should not be applied to questions pertaining to diversity:

As engineers, we’re trained to pay attention to the details, think logically, challenge assumptions that may be incorrect (or just fuzzy), and so on. These are all excellent tools for technical discussions. But they can be terrible tools for discussion around race, discrimination, justice, and so on, because these discussions touch topics with a high cultural and emotional content. That’s because questioning the exact details can easily be perceived as questioning the overall validity of the effort, or the veracity of the historical context.

Behind Hölzle’s statement is the assumption that it is wrong to question the validity of a diversity effort that treats people differently due to innate characteristics beyond their control or the truth of the narrative used to justify it. Instead, these claims must be taken on faith. The emotions of those who would benefit are so inviolable as to warrant suppressing inquiry into the facts, yet no regard is given for the emotions of those who are suffering from this discrimination. Those who believe this should be ashamed to call themselves supporters of either science or justice.

Hölzle goes on to compare questioning the narratives behind diversity programs with going to a funeral and criticizing the deceased. It would be the wrong time to do so out of respect for the mourners, even if the deceased was a person who deserved criticism. This is undoubtedly true, but it also a deeply flawed analogy. A funeral lasts for a short period of time. The fact that someone has died does not grant that person the right to be perpetually treated as infallible. If now is not the right time to question these policies, then when is? No answer is provided to this question.

For a better example of how to address these issues, we might do well to look to Alan Dershowitz, a Jewish law professor at Harvard, who was once confronted with an anti-Semite who denied the historical accuracy of the Holocaust. Rather than seeking to censor the anti-Semite, Dershowitz instead proposed a debate between the two of them that would take place at Auschwitz, where the evidence for the Holocaust is located.2 As Justice Louis Brandeis said when defending the importance of transparency and free speech, “Sunlight is said to be one of the best disinfectants.” If one is confident in the strength of the evidence to support one’s claims, then there is no good reason to fear scrutiny.

Based on the information revealed in Damore’s complaint, we would do well to recognize that Google has through its actions forfeited a great deal of its credibility. It cannot claim to be a neutral arbiter of information when it denies a hearing to any ideas that do not conform to its politically correct dogma. It cannot claim to be a leading proponent of science when it prioritizes emotions over truth. It cannot claim not to be evil when it censors and discriminates. The case is still in its earliest stages, and there is no doubt that even more of Google’s ugly internal culture will be revealed when witnesses begin to be interrogated. It seems likely that Damore’s charges will resonate with a jury that, unlike Google, will contain Americans from across the political spectrum. Yet whatever the outcome of the case is in a court of law, what has been revealed ought to affect the degree of trust that the public extends to Google.

 

The author is a software engineer. Gideon Scopes is a pseudonym. Given the current climate surrounding political expression in the technology industry, his real name has been withheld.

 

References

1 Sommers, Christina Hoff. How fainting couch feminism threatens freedom [Internet]. Washington (DC): American Enterprise Institute; 2015 Jun 22 [cited 2018 Jan 28]. Available from: http://www.aei.org/multimedia/how-fainting-couch-feminism-threatens-freedom/

2 Dershowitz, Alan. The Case for Israel. Hoboken (NJ): John Wiley & Sons, Inc; 2003. 265 p.

The post Lawsuit Exposes Internet Giant’s Internal Culture of Intolerance appeared first on Quillette.

27 Jan 08:12

The Apple Tax Giveaway

by Damir Marusic

It almost never snows in Silicon Valley, but last week the flurries were really flying and the snow-job drifts were piling up high at Apple Inc.’s corporate headquarters in Cupertino.

On January 17, Apple issued a press release that reads like a White House infomercial for the Trump/Goldman tax heist that was rammed through Congress three days before Christmas 2017. It contains a flurry of “stylized facts” about all the wonderful things that Apple, armed with the tax cuts, plans to do for the U.S. economy over the next five years. These include a purported $350 billion increase in Apple’s purchases from U.S. suppliers; $30 billion of new U.S. capital investment; 20,000 new U.S. jobs; a second U.S.-based “campus”; and the expansion of something called an “Advanced Manufacturing Fund” from $1 billion to $5 billion. 

True to form, most leading U.S. business media, including the Wall Street Journal and CNBC, took these Apple statements at their word and channeled them enthusiastically to their readers and viewers, like the corporate cheerleaders they usually are. They neglected to mention the following cautionary language at the bottom of the press release, in fine print:

This press release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include without limitation those about Apple’s plans for future investments and expansion, taxes, Apple’s plans for managing its cash balances, and repatriation of overseas cash. These statements involve risks and uncertainties, and actual results may differ.

Indeed, upon closer inspection, most of the claims in the press release turn out to be “forward looking” in the very worst sense; that is to say, they avoid looking back and around at what has really been happening.

As we’ll see, most of the “new jobs” and spending have nothing to do with the tax cuts; they are linear extensions of Apple’s pre-tax cut behavior, which were already in the pipeline.

Furthermore, the press release intentionally skates past the question of precisely how Apple will be affected by the new tax law. It is especially careful to avoid mentioning  that—as already reflected in its recent stock price surge—Apple is almost certain to be the tax heist’s largest single corporate beneficiary by far.

As such, this latest Apple PR campaign easily outdistances ordinary run-of-the-mill efforts at corporate self-promotion. It represents a willful effort to bury all the gory details about how this massive transfer of public wealth will actually work. Indeed, the very tone of the release implies that Apple’s fellow American taxpayers should basically feel grateful that it is willing to pay any corporate taxes whatsoever—as if Apple were not just a giant capitalist corporation, spending every waking moment figuring out how to maximize profits and minimize taxes; as if it were some medieval lord, sitting in his brand-new circular castle, saddling the peasants with all of the tax burdens and common soldiering that keep the commonwealth safe in exchange for the sheer unadulterated privilege of being lied and sold to.

Anatomy of a Scam

To begin with, as other observers have noted, Apple’s claims regarding its likely future purchases from U.S. suppliers, job creation, and capital spending turn out to be wildly overstated and downright misleading.

In particular, the levels of U.S. job creation and U.S. capital spending that Apple says it “intends” to deliver over the next five years are entirely consistent with its historical levels of U.S. job creation and spending in the past five years, if actually a little bit lower. For example, Apple’s U.S. retail stores accounted for 42,000 added jobs in the 2007-12 period.  It is likely that U.S. jobs also accounted for a significant share of the 46,900 new jobs Apple added in 2012-17.  Further, both of these earlier Apple job gains occurred during a period when the U.S. economy was struggling to recover from the Great Recession.

Apple doesn’t disclose the geographic details we need to precisely assess its promise to spend $34 billion more in the United States in the next 5 years. But it is quite likely that U.S. facilities accounted for a very high share of its $54 billion of total capital spending in the past five years.  So this is also by no means a bold departure from pre-tax cut trends.

Furthermore, as we’ll soon see, yet another new tax break in the new law will also help Apple share the cost of all this (already-planned) investment with other U.S. taxpayers.

Of course, this is by no means impugns the importance of Apple’s contribution to U.S. employment and capital spending. It is only to argue that massive corporate tax cuts were evidently not essential for it.

As for Apple’s commitment to spend $350 billion over the next five years on U.S. suppliers—since, once again, it does not disclose any geographic details about its supplier purchases—it is impossible to judge whether this really presages a departure from historical levels.  But we do know that the overwhelming share of Apple’s recent supplier purchases has been from non-U.S. vendors, mainly in China. Is this really likely to change? Without hope, there is only desire.

Apple’s press release does contain one passage that helps us understand its core motivation for suddenly showcasing all these bold “new” plans, most of which, as already indicated, were in the oven. This is its only mention of the generous new tax law’s impact:

Apple, already the largest US taxpayer, anticipates repatriation tax payments of approximately $38 billion as required by recent changes to the tax law. A payment of that size would likely be the largest of its kind ever made.

This simple statement is a brilliant distortion on many levels; again, it almost makes it sound as if Apple will be doing other taxpayers a favor. Nothing could be further from the truth.

To begin with, it pays to read the fine print.  The new tax law does require MNCs like Apple to pay a modest (8 to 15.5 percent, depending on whether the assets involved are illiquid or cash) tax on the heretofore untaxed stash of offshore profits and royalties accumulated since 1986.  As of fall 2017, this is estimated to be worth about $2.6 trillion for all U.S. MNCs. In the case of Apple, by far the largest such offshore stash holder, the figure is $252.3 billion. The $38 billion “repatriation tax payment” noted by Apple’s press release is indeed consistent with a 15.1 percent average tax on this accumulated offshore stash.1

However, a careful reading of the new tax bill reveals that Apple and its MNC brethren are not actually required to pay this “repatriation tax” bill on their accumulated offshore stash now, but will have up to eight years to do so—interest free!—despite the glaringly obvious fact that Apple has plenty of ways to make money off the deferred cash in the meantime. Under the law’s terms they can opt for an installment plan that allows them to pay just 8 percent of the total repatriation tax liability each year for the first five years, then 15 percent, 20 percent, and finally 25 percent, in 2026!2

I’m sure we all know quite a few hard-working American taxpayers who would like to have eight years to pay their taxes, no interest asked. Perhaps they should have hired a few more tax lobbyists. The upshot is that this is one heck of a deal, especially for Apple, the world’s largest, most profitable corporation. And to a great extent it has Donald Trump to thank for it. Meanwhile, Goldman Sachs CEO Lloyd Craig Blankfein, ordinarily regarded as a Hillary supporter, was singing Donald’s praises for the tax law just this week. Speaking of corporate lobbyists and those who hire and unleash them, Apple should probably thank him, too.

But it gets even better. Once again, according to the fine print of the tax bill, Apple and the other MNCs are not actually required to “repatriate” their offshore stashes to the United States, much less to invest them here. They may do so, but the only legal requirement is that they commit to pay the repatriation tax. Having done that, they are free to do anything their hearts desire. If they decide to “repatriate”—which normally just requires a bookkeeping entry, since most of the cash is in fact invested by way of Wall Street banks—MNCs like Apple might decide to invest them in U.S. capital projects. But they might also freely decide to use them to buy back their own shares, increase dividend payouts, or burn them as a sacrifice to the pagan idols on the beach at Mar-a-Lago.

Or they may even freely decide to invest them in new offshore business operations, or leave the offshore stash precisely where it lies, booked as “offshore” investments in marketable securities. Assuming Apple does that, and simply realizes the same average gross yield on cash and marketable securities that it realized in 2017 —1.9 percent—then, given the installment option, it might actually be able to pay the entire $38 billion “repatriation tax” bill out of the (perhaps untaxed) incremental investment income that will be generated by its cash stash over the next eight years. Moreover, it may actually end up with more offshore wealth than it started with—nearly $258 billion by 2026!3

Now, obviously, Apple might decide that other uses of the offshore cash stash may offer even higher net tax returns. But the key point remains: Given the installment plan opportunity, whatever Apple decides to do with the stash it will not pay anything close to a 15 percent net present value cash tax on its offshore profits stash.

Indeed, after all is said and done, depending on what we assume about Apple’s cost of capital and the future yields on its stash, by 2026 Apple will probably end up paying at most a plus 2 percent to a minus .5 percent rate “repatriation tax rate.”4 (Of course, the same analysis applies to the dozens of other U.S. MNCs with offshore profit stashes.)

As if all this were not generous enough, the Trump/Goldman tax heist also permits U.S. companies like Apple to enjoy an amazing immediate 100 percent write-off for capital spending undertaken during the next five years.5 Recall the “$30 billion of capital spending over the next five years” that Apple bragged about in its press release? Once again, most of this appears to have been already in the pipeline, long before anyone assumed this tax law would be force-marched through Congress.

But now Apple’s $30 billion, plus the $4 billion of additional investment in the Manufacturing Fund, will probably qualify for this 100 percent full write-off.

By comparison, Apple’s entire “provision for taxes” in 2017—a bookkeeping entry—totaled $16 billion, while the “cash taxes” it actually paid totaled just $12 billion.

This means that its effective average “cash tax rate” was already only 18 percent of operating income even before the new tax law—just half the former top U.S. nominal corporate tax rate of 35 percent.

Going forward, with the Trump/Goldman’s newly established 21 percent peak nominal rate for domestic U.S. corporate income, Apple’s accountants will undoubtedly be on the prowl for new ways to reduce its cash tax rate below even the new statutory maximum. Here is one of them: Applying the new 21 percent rate, and assuming that Apple does indeed make the $34 billion of U.S. investment over the next five years, this instant write-off could eliminate close to half of its entire U.S. corporate tax liability during that period. Of course, this is on top of the “repatriation tax” loan scam described above.6

Looking Forward: The Offshore Advantage Continues

The other key fact about the new tax law that Apple’s January 17 press release neglected to mention is that U.S. law has now adopted a fairly aggressive version of a “territorial” corporate income tax. This means that, subject to certain restrictions, MNCs like Apple will no longer have to pay very much if any income tax on the non-U.S. earnings of their foreign subsidiaries.7 For U.S. MNCs like Apple, whose domestic U.S. business now accounts for just 35 percent of its worldwide sales and 27 percent of its earnings—down from over half for both measures a decade ago—this may be the greatest single windfall of all.8 As I recently discussed, it is also by far the greatest concern for developing countries.

Of course many observers would claim that this cat was already out of the bag. As we noted, as least since the late 1970s there has been a kind of “tax race to the bottom,” especially among rich countries. Under the impact of this bout of tax competition, the 70+ percent rates of the 1960s and 1970s and the 48 percent rates of the early 1980s have long since given way to much lower nominal corporate rates all over the planet.

Furthermore, in the past two decades, at least 27 of the 35 OECD countries have already adopted their own versions of “territorial corporate income taxes,” and the few that have not, like Korea, Mexico, Chile, and Israel, are under intense pressure to do so.

At first, in the 1970s and 1980s, the United States led this trend, but then it fell behind. As of 2017, before the passage of Trump/Goldman, its 35 percent nominal CIT rate was the highest in the OECD. The lag was partly just due to the fact that most U.S. MNCs and their accountants had long since engineered “private” ways around the old system—like Apple’s complex arrangements with Ireland, Bermuda, the Netherlands, and the Isle of Jersey—that were not easy give up, especially for the thousands of “enablers” in the accounting and legal professions whose livelihoods depended on them.

In effect, because of such offshore arrangements, plus numerous domestic deductions and loopholes, very few large U.S. corporations have been paying anything like this 35 percent headline rate—certainly not giant MNCs like Apple.  The average “effective” corporate income tax was already well under 20 percent even before Trump/Goldman, and for many MNCs it was even lower.

Indeed, the root cause of the giant $2.6 trillion offshore cash stash and the repatriation tax scam is the fact that, under the old system, U.S. taxation of profits and royalties booked abroad was deferred entirely until these were remitted back home to their corporate parents. This gave U.S. MNCs an irresistible incentive to find creative ways to book as much income as possible offshore—for example, by booking their software, trademarks, and other intellectual property in low-tax havens and then paying themselves royalties tax free. To do so, they had the help of the world’s “global haven industry,” staffed by the world’s largest accounting firms, law firms, and banks, and located in more than 111 low-tax secrecy jurisdictions around the planet from Ireland to Singapore. Over time, of course, many top-tier MNCs like Apple assembled their own outstanding in-house teams of enablers. In a sense, therefore, they not only financed the rise of the global haven industry; they enlisted in it.

Was there an alternative to the recent tax heist, given the fact that tax competition already had such a head start with such powerful interests behind it? Was a global progressive corporate tax reform, aimed at halting the “race to the bottom,” ever in the cards? One would not know it from anything the Democrats did, or rather did not do—like developing and articulating an alternative tax reform proposal to show the contrast with the GOP proposal. But the short answer is “of course.” The key obstacles have always been political, not technical. But the United States alone has always exerted a huge influence on international corporate tax policy. For the moment, it is a heavyweight on the wrong side of the global tax justice scale.

Looking Backwards: Where the $252 Billion Came From

In Apple’s case, all this offshore chicanery means that a significant portion of its $252 billion of accumulated “offshore profits and royalties” actually derived from domestic U.S. activities like software engineering and branding. Apart from the legal chicanery that permitted these rights to be transferred to, say, Bermuda or Jersey at ridiculously low valuations, their royalties would have been taxed years ago at the higher U.S. rates paid by domestic corporations.

Without more transparency from Apple, it is hard to parse the resulting $252 billion into “legitimate offshore” and “dodgy diversions.” But tax experts have long suspected that a significant share deserves a closer look from IRS auditors—especially the $129 billion that Apple has accumulated in Ireland alone, including $114 billion since 2009. Unfortunately, now that the new tax law is in place, this is unlikely to happen.

Looking forward, then, we may safely assume that on the margin, Apple will not only face a much lower effective domestic U.S. corporate tax rate on its (shrinking share) of domestic earnings. It will also continue to enjoy a very low (10 percent at most) U.S. tax rate on its (relatively high-growth) offshore business.9 And it will also be aided by the new law’s indirect effects on tax competition, and on the lower effective corporate tax rates that key developing countries like India, South Africa, and Argentina may be compelled to adopt.

In sum, from the standpoint of U.S. national interests, it is not clear that, on balance, the new tax bill really offers Apple and other MNCS any net incentives at all to expand their U.S. operations, invest at home, or even “repatriate” its offshore cash hoard. After all, 10 percent is less than 21 percent, even in Cupertino. 

In the interests of full disclosure, I have been a huge fan of Steve Jobs and Apple Computer since at least the early 1980s, a former senior executive at one of its early allies in the software industry, an avid consumer of its products, and a (very modest) shareholder since the early 2000s. In that capacity, along side far larger investors like Al Gore (230,137 shares), I’m one of Apple’s remaining 22,750 individual shareholders who (as of October 2017) collectively own about 39 percent of the company.10

A comparative handful of Apple’s own management team also constitute important shareholders: Arthur Levinson, the company’s chairman and largest individual shareholder, reportedly owns 1.1 million shares; its CEO, Tim Cook, owns at least 901,000. While the number of individual investors has declined by about 21 percent since 2009, many of us old-timers retain a nostalgic attachment to this extraordinary company based not only on its track record, but also on the fact that it has long been just ever so slightly “radical” in the best sense of the world—willing to take risks and challenge establishments. Just remember the famous original ad for the Macintosh during Super Bowl XVIII way back in 1984.

You’d think by now that we would all be delighted with Apple. It is the largest, most successful corporation in history, with a market capitalization fast approaching $1 trillion and more than 600 million customers in 100 countries who use over a billion of its devices every day. In the past year alone its stock price has soared by 60 percent, from $110 around the time of Donald Trump’s election to more than $170 today.

However, for many Apple fans, customers, and at least a few stockholders, it was never just about commercial success. Sadly, it is increasingly clear that in the past decade, Apple has itself become the establishment. To the extent that the soaring stock price simply reflects expected tax cuts and a gigantic wealth transfer, none of us should be celebrating, no matter how “rich” they make us.

Unfortunately, by now the other 61 percent (and rising) of Apple shares outstanding  is owned by a hodgepodge of institutional investors like Black Rock, State Street Corporation, Warren Buffett’s Berkshire Hathaway, and some 2,581 others. By and large, these are cold-blooded entities, citizens of nowhere, that could not care less where a corporation is headquartered, where it invests, how many jobs it creates,  or how many students use its computers, so long as it brings home the bacon. Nor do these institutional investors care where or even whether a corporation pays taxes, so long as it does not damage its reputation by getting caught or by appearing to misbehave. Apple’s January 17 press release seems to have been written on their behalf.

As for products and markets, Apple also appears to have become much more conservative in that domain. The phenomenally successful I-Phone line alone now accounts for 62 of net revenues, up from 16 percent in 2009. Its top market will soon be one-party state-capitalist China (24 percent of sales and rising), not the officially democratic capitalist United States (27 percent and falling) or social-democratic Europe (20 percent). This has made repeating anything like the 1984 anti-Big Brother ad campaign unimaginable, simply because it would be banned in so many high-growth markets.

Of course, the company may just be between product cycles, with great new ones soon to be introduced that will change the very nature of our being. However, under Tim Cook’s more conservative papacy, the company has become more prosaic. Its strategic focus has shifted from big bold ideas to a kind of execution-oriented incrementalism—plus a whole new level of financial chicanery, including the kind of tax games that we’ve just explored.

In any event, the growth of Apple’s top-line revenue and operating cash flow have both slowed dramatically (see chart below). During the Tim Cook era, so far, the company has increasingly behaved like a giant financial rotisserie, returning more and more of its cash to shareholders in the form of dividends and share buybacks. Such behavior is widely considered by finance experts to be a clear sign that a company is running out of good ideas.11

Indeed, ever since Cook assumed the helm in 2012, Apple has even borrowed over $116 billion to make these payments, even while it has more than doubled its cash stash. Of course, during his last years at Apple Steve Jobs also accumulated gobs of cash. He also invested in the business at rates that Cook has matched or slightly exceeded, except for acquisitions.

But under Jobs, Apple was at the very beginning of several product life-cycles, with revolutionary new products like the iPhone and the I pad, revenues and cash flow that were both growing at double-digit rates, and the company still breaking into high-growth global markets like China. So some cash accumulation was inevitable.

Furthermore, Jobs had a visceral contempt for the very notion that an innovative, risk-taking company like Apple would ever act like some bureaucratic GE-type financial conglomerate. He refused to waste time managing quarterly earnings to please Wall Street pundits; to placate investment bankers and institutional investors with gratuitous borrowing, share buy backs, or dividend payouts; or to engage in the kind of rhetorical snow-making and outright tax scams we described earlier. Jobs’s Apple was not in the business of spinning up tax cuts and then handing giant wads of cash back to wealthy shareholders and institutions who for the most part are in the habit of “thinking alike.” He preferred to take big risks and invest in big ideas.

Of course, it is impossible for outsiders to assess what an intensely secretive company like Apple is really up to. Maybe it is working on bold new missions like individualized health care, robotics, 3D imaging, and electric vehicles. We certainly hope so. But this is all very far from the liberating “IT revolution” that so many in the industry once believed in. Maybe they simply failed to predict what the macro-social effects of the new technologies would be. But we somehow have ended up with a much harder-edged, neo-Darwinian version of what the industry is all about.

Worst of all, our most successful IT companies, which once prided themselves on egalitarianism and the relentless free spirit of democratic societies, have ended up contributing directly to unprecedented levels of inequality, partly just by way of their tax agendas. Many of them have promoted “representation without taxation” at home while turning a blind eye (or worse) to dictatorship abroad. This undermines liberal democracy, the ultimate golden goose for all of us—even Apple.

It would be remarkable if all this somehow did not come back to haunt us. Indications abound that Apple Inc. may indeed be experiencing some limits to growth; perhaps this is inevitable given the company’s size and complexity. But it no less sobering to those who believe that entrepreneurship—by corporations and governments alike—should be a progressive force. It often has been, and it can be so again.

1. This implies that Apple’s offshore stash consists of $237 billion of “cash” assets and $15 billion of less-liquid assets. The 8 percent rate applies to less liquid offshore assets, and the 15.5 percent rate to cash. In Apple’s case, the $38 billion estimated tax liability works out to about 15.1% of its $252.3 billion of offshore cash and marketable securities as of October 2017, which implies that roughly 94 percent of these assets were in liquid assets like tradable securities.

2. See http://docs.house.gov/billsthisweek/20171218/Joint%20Explanatory%20Statement.pdf.  482-3: A U.S. shareholder may elect to pay the net tax liability resulting from the mandatory inclusion of pre-effective-date undistributed CFC earnings in eight…installments… The timely payment of an installment does not incur interest.  487: “The Senate amendment follows the House provision in allowing a U.S. shareholder to elect to pay the net tax liability resulting from the section 951 inclusion in eight installments. However, if installment payment is elected, rather than requiring eight equal installments, the Senate amendment requires that the payments for each of the first five years equal 8 percent of the net tax liability, the sixth installment equals 15 percent of the net tax liability, increasing to 20 percent for the seventh installment and the remaining balance of 25 percent in the eighth year.” 489:  With respect to this provision, the Conference agreement and the final bill followed the Senate version.

3. The example in Chart 3 assumes that Apple’s 1.9% per year projected average gross investment yield on its offshore stash is tax free, because it continues to be booked “offshore” with non-US Apple subsidiaries, and because under the terms of the Trump/Goldman tax law, going forward, income generated by such non-U.S. subsidiaries are eligible for a 100 percent “permanent exemption” from U.S. tax.  Under an alternative scenario, in which Apple effectively has to pay the new 21 percent marginal corporate tax rate that applicable to domestic corporate income on such investment yields, it still ends up with a $248 billion cash stash by 2026.

4. This assumes, based on the work of other analysts (see for example https://www.gurufocus.com/term/wacc/AAPL/WACC/Apple%2Binc) that Apple’s own weighted average cost of capital is about 9.6%, that its gross yield on offshore investments averages 1.9% over the next eight years, that these yields are subjected to U.S. income tax rates that vary from 0% to 21%, and that Apple chooses to take full advantage of the Trump/Goldman eight year installment tax plan.  Under these assumptions, the net present value, in $2017, of the future stream of tax payments on the $252 billion offshore stash varies from +$1.5 billion to minus $5 billion, for an effective NPV tax rate of -.5% to 2%.

5. See http://docs.house.gov/billsthisweek/20171218/Joint%20Explanatory%20Statement.pdf, p. 189: “The 50 percent allowance is increased to 100 percent for property placed in service after September 27, 2017, and before January 1, 2023 (January 1, 2024, for longer production period property and certain aircraft).”  This basic Senate provision on accelerated depreciation for the next five years was adopted in the Conference report.

6. In 2017, Apple’s overall  “cash tax rate” – cash actually paid as a share of operating income – was 18.1 percent, compared with the nominal US rate of 35 percent.  The gap was mainly accounted for by its offshore cash stash, but it also took benefitted from favorable tax treatment for R&D and employee share compensation.

7. This is done by virtue of a so-called “permanent exemption” from taxation of dividends paid by non-US subsidiaries that are at least 10 percent owned by their US parent companies. The provisions of the new law with respect to offshore income are quite complex, and it appears that offshore earned income by US MNCs might in theory be subject to US income tax rates on the order of perhaps 10 percent.  But this is clearly well below the 21 percent nominal tax rate that will apply to domestic corporate income.

8. See Apple’s latest 10-K (October 2017), available at http://investor.apple.com/secfiling.cfm?filingID=320193-17-70&CIK=320193.

9.  In theory, the Trump/Goldman tax law provides for 10 percent surcharges on so-called “GILTY” offshore income, over and above 10 percent ROAs generated by U.S.-owned offshore subsidiaries. It also includes a similar tax on so-called offshore “Base Erosion” profits.  In practice, implementing  these new offshore taxes for all of the foreign subsidiaries of U.S. MNCs will be a reporting nightmare for IRS and a bonanza for accounting firms,  and may take years to be enforced—by which time it is hoped that this atrocious law will have been amended.

10. As of Apple’s last 10-K, published on October 20, 2017, there were 25,333 Apple shareholders of record, who collectively owned 5.25 billion fully diluted shares of common stock. According to the latest SEC 13F reports on institutional ownership of Apple stock, 2583 institutional shareholders accounted for 60.8% of Apple share ownership, including the top five institutions – Vanguard Fund, Blackrock, State Street, FMR LLC, and Berkshire Hathaway, that owned 22.5 percent. See http://www.nasdaq.com/symbol/aapl/ownership-summary . For our purposes  here orders of magnitude  will suffice, so we have extrapolated the implied ratios forward to January 2018.

11. Shareholder buybacks have been widely criticized in the finance literature. See, for example William Lazonick, “Profits Without Prosperity,”  HBR,  September 2014, at https://hbr.org/2014/09/profits-without-prosperity. But  a recent Sept 2017 HBR survey piece about shareholder buybacks argued that they have their uses. See Alex Edmans, “The Case for Stock Buybacks.” HBR (September 2017), at https://hbr.org/2017/09/the-case-for-stock-buybacks  Edmans concedes that that shareholder buybacks are often a signal the a company is running out of investment ideas. They may  be a more appropriate use of corporate cash than wasting spending on bad investments, and a more flexible, tax-efficient way to distribute this cash to certain categories of shareholders than dividends. QED.

The post The Apple Tax Giveaway appeared first on The American Interest.

24 Jan 03:20

Who'd Have Thought? Scarce Resources Are Still Scarce Even (Especially) When They Are Free

by admin

Via Mark Perry, this chart from socialized Canadian medicine:

In his article Mark also has a letter to a woman telling her the wait for an appointment would be 4.5 years.

 

14 Jan 02:22

Google managers kept blacklists of conservative employees — and one manager even considered holding 'trials', alleges a new lawsuit (GOOG, GOOGL)

by Julie Bort

Google logo office employee

  • Employees at Google who express "conservative viewpoints in politically-charged debates" may find themselves blacklisted by managers at the company, alleges an explosive new lawsuit.
  • And by blacklisted, that means their names may appear on actual lists, the suit contends.
  • Google employees who identify as conservative say they have complained to HR and senior management about the blacklists.
  • These allegations are part of a lawsuit filed on behalf of fired Google engineer James Damore that seeks to represent white males and conservatives who feel like they've been the target of discrimination.


A well-known Republican San Francisco lawyer has filed a lawsuit against Google seeking to represent white, male or conservative employees who believe the company has discriminated against them.

The lawyer is Harmeet Dhillon, a partner with the Dhillon Law Group in San Francisco and the former chairwoman of the Republican Party in San Francisco.  

She has been on the hunt for such victims since she took on fired Google engineer James Damore as a client in August. And on Monday she presented the first fruits of her research in a 161-page complaint that's chock full of allegations and screenshots.

The most jaw-dropping allegation is that "Google publicly endorsed blacklists" of conservatives. The lawsuit claims that several hiring managers publicly vowed not to hire people categorized as "hostile voices" aka conservatives.

For instance, one manager wrote on one internal forum, "I will never, ever hire/transfer you onto my team. Ever."

Another manager wrote in another, "I keep a written blacklist of people whom I will never allow on or near my team, based on how they view and treat their coworkers. That blacklist got a little longer today."

The lawsuit cites another post from another hiring manager that said, "If you express a dunderheaded opinion about religion, about politics, or about ‘social justice’, it turns out I am allowed to think you’re a halfwit... I’m perfectly within my rights to mentally categorize you in my [d*ckhead] box... Yes, I maintain (mentally, and not (yet) publicly)."

Interestingly, the lawsuit doesn't show the statements that provoked such strong reactions from these managers. It only characterizes them as "tactfully expressed conservative viewpoints in politically-charged debates."

Whether expressing anti-diversity sentiments at a workplace is a protected "conservative viewpoint" or, rather, a form of bigotry that actually creates a hostile environment is at the heart of the case — and it reflects a broader debate gripping the country under the divisive presidency of Donald Trump.

"Something resembling a trial"

The lawsuit shows that in at least one case, a manager (a white woman), was contemplating keeping some kind of actual, public list of employee names.

The manager wrote on an internal post, "I am thinking of something like a google doc that accepts comments, and which calls out those googlers that are unsupportive of diversity," she wrote.

She wondered, in the post, whether special "trials" should be held for employees nominated for the list, to determine whether they belonged on it or not. 

The lawsuit shows her post as evidence:

Alleged Google blacklist

The lawsuit names other instances, too. It says that conservative employees reported such lists or other attempts to block them and their comments on Google's internal social media sites to HR who told them that employees have the right to block others or make statements about the type of employees they liked to work with.

The lawsuit says that conservative employees on two occassions in the fall of 2017, also brought the matter of such lists up with Paul Manwell, Google CEO Sundar Pichai’s chief of staff, and to senior lawyer Kent Walker. 

This lawsuit was filed on behalf of Damore, the engineer who created a firestorm last summer with his memo about women in tech and his comments about how Google treats conservatives. It seeks class-action status to represent other white or male or conservatives employees who believe they faced discrimination at Google.

A Google spokesperson says the company is ready to fight this lawsuit, telling us. "We look forward to defending against Mr. Damore's lawsuit in court."

SEE ALSO: The engineer fired for his memo about women in tech is suing Google for discrimination over being white, male, and conservative

Join the conversation about this story »

NOW WATCH: Why airplane windows have tiny holes

29 Nov 11:38

An Economist Chews over Thanksgiving

by Timothy Taylor
As Thanksgiving preparations arrive, I naturally find my thoughts veering to the evolution of demand for turkey, technological change in turkey production, market concentration in the turkey industry, and price indexes for a classic Thanksgiving dinner. Not that there's anything wrong with that. [Note: This is an updated and amended version of a post that was first published on Thanksgiving Day 2011.]

The last time the U.S. Department of Agriculture did a detailed "Overview of the U.S. Turkey Industry" appears to be back in 2007, although an update was published in April 2014 . Some themes about the turkey market waddle out from those reports on both the demand and supply sides.

On the demand side, the quantity of turkey per person consumed rose dramatically from the mid-1970s up to about 1990, but then declined somewhat, but appears to have made a modest recovery in the last couple of years The figure below is from the Eatturkey.com website run by the National Turkey Federation.




On the production side, the National Turkey Federation explains: "Turkey companies are vertically integrated, meaning they control or contract for all phases of production and processing - from breeding through delivery to retail." However, production of turkeys has shifted substantially, away from a model in which turkeys were hatched and raised all in one place, and toward a model in which the steps of turkey production have become separated and specialized--with some of these steps happening at much larger scale. The result has been an efficiency gain in the production of turkeys. Here is some commentary from the 2007 USDA report, with references to charts omitted for readability:

"In 1975, there were 180 turkey hatcheries in the United States compared with 55 operations in 2007, or 31 percent of the 1975 hatcheries. Incubator capacity in 1975 was 41.9 million eggs, compared with 38.7 million eggs in 2007. Hatchery intensity increased from an average 33 thousand egg capacity per hatchery in 1975 to 704 thousand egg capacity per hatchery in 2007.
Some decades ago, turkeys were historically hatched and raised on the same operation and either slaughtered on or close to where they were raised. Historically, operations owned the parent stock of the turkeys they raised while supplying their own eggs. The increase in technology and mastery of turkey breeding has led to highly specialized operations. Each production process of the turkey industry is now mainly represented by various specialized operations.
Eggs are produced at laying facilities, some of which have had the same genetic turkey breed for more than a century. Eggs are immediately shipped to hatcheries and set in incubators. Once the poults are hatched, they are then typically shipped to a brooder barn. As poults mature, they are moved to growout facilities until they reach slaughter weight. Some operations use the same building for the entire growout process of turkeys. Once the turkeys reach slaughter weight, they are shipped to slaughter facilities and processed for meat products or sold as whole birds.
Turkeys have been carefully bred to become the efficient meat producers they are today. In 1986, a turkey weighed an average of 20.0 pounds. This average has increased to 28.2 pounds per bird in 2006. The increase in bird weight reflects an efficiency gain for growers of about 41 percent."
The 2014 report points out that the capacity of eggs per hatchery has continued to rise (again, references to charts omitted):
"For several decades, the number of turkey hatcheries has declined steadily. During the last six years, however, this decrease began to slow down. As of 2013, there are 54 turkey hatcheries in the United States, down from 58 in 2008, but up from the historical low of 49 reached in 2012. The total capacity of these facilities remained steady during this period at approximately 39.4 million eggs. The average capacity per hatchery reached a record high in 2012. During 2013, average capacity per hatchery was 730 thousand (data records are available from 1965 to present)."
U.S. agriculture is full of examples of remarkable increases in yields over perionds of a few decades, but they always drop my jaw. I tend to think of a "turkey" as a product that doesn't have a lot of opportunity for technological development, but clearly I'm wrong. Here's a graph showing the rise in size of turkeys over time from the 2007 report.




The production of turkey remains an industry that is not very concentrated, with three relatively large producers and then more than a dozen mid-sized producers. Here's a list of top turkey producers in 2015 from the National Turkey Federation:
Given this reasonably competitive environment, it's interesting to note that the price markups for turkey--that is, the margin between the wholesale and the retail price--tend to decline around Thanksgiving, which obviously helps to keep the price lower for consumers. Mildred Haley of the US Department of Agriculture spells this out in the "Livestock, Dairy, and Poultry Outlook" report of October 2017. The vertical lines in the figure show that the markups clearly fall around Thanksgiving.

In the past, the US turkey industry has at some times suffers from outbreaks of HPAI
(Highly Pathogenic Avian Influenza): for discussion of the 2015 outbreak, see the November 17, 2015 issue of the "Livestock, Dairy, and Poultry Outlook" from the US Department of Agriculture, Kenneth Mathews and Mildred Haley offer some details. But for Thanksgiving 2017, supply seems to have remained strong and turkey prices are down a bit.

For some reason, this entire post is reminding me of the old line that if you want to have free-flowing and cordial conversation at dinner party, never seat two economists beside each other. Did I mention that I make an excellent chestnut stuffing?

Anyway, the starting point for measuring inflation is to define a relevant "basket" or group of goods, and then to track how the price of this basket of goods changes over time. When the Bureau of Labor Statistics measures the Consumer Price Index, the basket of goods is defined as what a typical U.S. household buys. But one can also define a more specific basket of goods if desired, and since 1986, the American Farm Bureau Federation has been using more than 100 shoppers in states across the country to estimate the cost of purchasing a Thanksgiving dinner. The basket of goods for their Classic Thanksgiving Dinner Price Index looks like this:



The cost of buying the Classic Thanksgiving Dinner actually declined by a bit in 2017, falling to $49.12 from $49.87 in 2016. The top line of the graph that follows shows the nominal price of purchasing the basket of goods for the Classic Thanksgiving Dinner. The lower line on the graph shows the price of the Classic Thanksgiving Dinner adjusted for the overall inflation rate in the economy. The line is relatively flat, which means that inflation in the Classic Thanksgiving Dinner has actually been a pretty good measure of the overall inflation rate.



Thanksgiving is a distinctively American holiday, and it's my favorite. Good food, good company, no presents--and all these good topics for conversation. What's not to like?
29 Nov 06:19

Net neutrality: A primer - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

by Hao-Kai Pai

If you went online this Thanksgiving holiday weekend, you probably encountered a post (or 20) about net neutrality. Prompted by the Federal Communications Commission’s (FCC) proposal to repeal its 2015 Open Internet Order, social media was inundated with alarmist screeds lamenting the demise of “the internet as we know it.”

net neutrality primer

Ajit Pai, Chairman of the Federal Communications Commission, REUTERS.

But as with many social media outbursts, the rhetoric far outpaces reality. The proposed order would restore the legal framework that governed broadband providers until 2015 — the framework under which “the internet as we know it” grew and flourished. And it would restore the Federal Trade Commission’s (FTC) authority to regulate broadband providers’ business practices (including consumer privacy), which was stripped by the FCC in 2015.

That’s not to say that there are no good arguments for and against net neutrality. But the nuances of the debate are not easily reducible to 140 (or even 280) character sound bites. This blog post is designed as a primer for those interested in getting up to speed on the net neutrality debate.

What is net neutrality?

Net neutrality is the idea that broadband providers should treat all internet traffic the same, regardless of its content or sender. In 2015, the FCC enshrined this principle in a rule that prohibited broadband providers from blocking or throttling internet content, from prioritizing some traffic over others on its network for a fee, and from otherwise engaging in conduct that would unreasonably interfere with or disadvantage the ability of internet content providers to reach consumers or vice versa. To provide legal authority for this rule, the FCC reclassified broadband providers as Title II common carriers, subjecting them to the regulatory framework written to govern the old wireline telephone network.

Why might that be important?

Proponents argue these rules are necessary because of the unusual position that broadband providers play in the internet ecosystem. Broadband providers control the route between a consumer and the internet. Critics fear that a broadband provider may abuse this position by blocking information with which the company disagrees, or by favoring traffic from affiliated companies over internet-based competitors. They also fear that allowing paid prioritization would favor well-funded internet content providers over less wealthy startups.

Are these concerns valid?

The speech concern seems specious. Broadband providers have never blocked content with which they disagree, and any attempt to do so would likely face public condemnation. Perhaps the most high-profile silencing of an online voice came earlier this year, when the neo-Nazi Daily Stormer newsletter was shut down following the Charlottesville rally. But it was suppressed not by broadband providers but by companies such as GoDaddy, Google, and Cloudflare. The Daily Stormer incident revealed that there are multiple chokepoints in the internet ecosystem, which undermines the argument that broadband providers pose a unique threat to the flow of information online.

The anticompetitive concerns are somewhat stronger. Broadband providers have incentives to favor affiliated companies over unaffiliated competitors. In 2005, a small telephone company called Madison River blocked its internet customers from using Vonage’s internet-based phone service because it feared customers would cancel their telephone service. One could imagine a broadband provider with a cable affiliate taking similar action to disadvantage Netflix or other internet-based video competitors.

But these concerns are largely hypothetical. Madison River is the only clear example that critics cite of such anticompetitive behavior — which is a pretty good track record over the past 20 years. Broadband providers also have strong counterincentives not to block or degrade content. The more content a consumer can reach online, the more valuable the connection is, and the more the consumer is willing to pay for it.

Moreover, antitrust law already protects consumers from this type of anticompetitive behavior. Economists recognize these concerns as vertical foreclosure claims. Over the past several decades, courts have developed a robust and detailed framework to assess when such practices are likely to harm consumers. One of the ironies of the 2015 order is that it strips the FTC — America’s strongest antitrust cop — of jurisdiction over broadband providers. Net neutrality proponents thus bear the burden of proving why broadband providers should not be governed by the same competition laws that regulate the rest of the American economy.

The benefits of prioritization and innovation

The FCC’s 2015 net neutrality regulation also prohibits prioritization that may benefit consumers. Different applications have different sensitivities to congestion. A small delay in packet delivery may be imperceptible to someone browsing the web but can erode the quality of a video stream or a telemedicine app. Prioritizing these packets could improve the experience for Netflix users or rural doctors, without adversely affecting users of congestion-insensitive services. But this type of pro-consumer traffic optimization is forbidden by net neutrality because of fear of anticompetitive abuse. Even the post office offers priority delivery — everyone can use the first-class rate, and those who need to get there faster can buy express mail. But broadband providers cannot offer similar tiers of service.

More generally, net neutrality discourages innovation by broadband providers. It assumes that the way broadband is currently delivered is the way it must always be, which limits providers’ ability to test new business models. For example, Sprint sought to offer a low-cost wireless plan with unlimited talk, text, and access to a social media plan of the subscriber’s choice. Such plans are available in other countries and cater to consumers (like my teenage daughter) who use their phones primarily for Instagram or Facebook and do not need to pay for an all-inclusive wireless broadband plan (perhaps because they already have full access at home). But Sprint ultimately shelved its plans following criticism that such an offering violated net neutrality.

If you’re interested in a more detailed discussion of these issues, check out my recent article “Revisiting net neutrality,” which was part of the Free State Foundation’s Perspectives series.

An appeal to civility

Despite the rhetoric, the FCC’s decision to return to the light-touch regulation of pre-2015 does not pose an existential threat to the internet. Ultimately, the net neutrality debate boils down to a discussion about whether existing antitrust law is sufficient to guard against the anticompetitive harm of vertical foreclosure, and if not, whether the FCC’s additional prophylactic rules do more harm than good.

Reasonable minds can, and do, disagree about these issues. But they should do so reasonably. Over the Thanksgiving holiday, the debate turned dark and personal. Social media featured a stream of hostile, sometimes racist attacks on FCC Chairman Ajit Pai, who was also harassed at his residence and saw protesters call out his children by name. On this, I agree with net neutrality proponent Free Press: This vitriol has no place in this discussion. The net neutrality debate will not end with the FCC’s vote on December 14. But hopefully it will continue in a much more civil tone than was on display during this past week.

28 Nov 22:36

The Lazy Zeppelins and Breakneck Boeings of the Shark World

by Natasha Frost
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Imagine a zeppelin and a Boeing 737 in the sky. The zeppelin glides along through low clouds, rotund and lighter than air. Much higher up, the heavy plane zips by at high speed, guzzling fuel to stay aloft. In the ocean, something very similar takes place—among sharks. In the frigid depths, where nutrients are scarce and light even scarcer, the rare bramble shark drifts lazily along—like a zeppelin. Almost 3,000 feet farther up, near the surface, whaler sharks zoom past, with wing-like fins lifting them in the water while their tails push their pace. To the bramble shark's blimp, they are jets—with a similar appetite for fuel.

According to a new paper published in Proceedings of the Royal Society B, sharks have developed a range of physical attributes that line up well with those of aircraft. And these variations are in more than just shape.

All sharks once had large, fatty, buoyant livers and lived near the bottom. As they evolved, some livers shrunk, which made life closer to the surface possible. Researchers investigated the body composition of some 32 shark species and found that more buoyant sharks, such as the bramble shark, slide slowly through the water, with fatty livers that make up more than a quarter of their body weight. Much like zeppelins, "[they] cruise near effortlessly at low speeds to save energy," Adrian Gleiss, lead author of the paper, from Murdoch University Centre for Fish and Fisheries Research, said in a statement. Negatively buoyant sharks, such as whaler sharks, are different. To remain afloat, they must motor through the water to generate lift, which requires a great deal more energy than their cousins below require. "For an animal to be wasteful with its energy expenditure should interfere with survival unless it would prove beneficial in some other manner," said study coauthor Jeremy Goldbogen of Stanford University-Hopkins Marine Station.

And indeed it is. Deep-dwelling sharks are round and bulky, while sharks in the shallows are sleek and javelin-like—the better to cut through the water, cut down on energy consumption, and keep pace with rapid surface prey. "The zeppelins of the shark world must live in cold places where slow swimming is the rule for both predator and prey," coauthor Jean Potvin of Saint Louis University said. For these sharks, more agile fish or squid are more or less off the menu—everything down there moves more slowly. Conversely, a fleet surface shark would never find enough fuel down there to keep going. In the great big ocean there's a place for both blimps and fighter jets.