Randoms of the weekend

The reduction in crime, like so many other modern "achievements," is really a failure of modern governance masked by technological improvement. For a more nuanced view, see Steve Sailer’s review of Steven Pinker’s latest. The review concludes:

I was born in an America in which women could walk downtown streets freely at night, where both infanticide and abortion were uncommon, where the prison population was small, and prison rape was not the default punchline as TV detectives handcuffed the bad guys. I have some hopes that, just as with my neighbor’s unlocked car, I might someday live in that America again.

Aretae makes the case for small, competitive states. Obviously when people make this case, they’re thinking about Singapore and Hong Kong. The argument is generally that small, competitive states make exit easier. But, I think it also makes discrimination against potential citizens easier. For example, do you really think it’s an accident that Singapore and Hong Kong are numbers 1 and 2 on this list?

Regulatory stupidity of the last few days: Again, it goes to Yglesias, who says:

But more broadly, I think it’s worth pointing out that it’s easy to overestimate the extent to which everyone in the DC area is just busy lobbying. According to the Washington Post’s 2010 “Post 200″ take on the regional economy the largest lobbying firm in the area, Patton Boggs, employs 150 lobbyists. The biggest law firm, Covington & Burling, employs 501 lawyers. By contrast, the University of Maryland, George Mason, George Washington, Georgetown, Howard, and American University combine to employ slightly over 100,000 people.

I regularly meet with lobbyists. The groups that come in to lobby always include more lawyers than people employed as lobbyists. I’ve also been lobbied by professors from at least three of the universities listed. Indirectly, many professors lobby all day long – what are policy papers if not lobbying documents?

HH Hoppe on immigration.

Alrenous on Genoans.

15% of people will say yes to anything.

Bankwatch:

The inconvenient truth is that modern banks lie in dangerous economic shadow zone that is part government and part commercial company.

It’s not often that I disagree with Vox, so I suppose it’s worth noting. If I have to pick between violent, furiously-masturbating hippies and the Oakland Police, I’m with the Oakland police. As Jim says, "Whosoever allies with one leftist, allies with every single one. . ."

Here’s a good solution to the problem of our electorate being overly well-informed.

Ulysses directs us to patriactionary – I haven’t read anything there yet, but you’ve got to love the name.

Randoms of the day

Eugenicist on public opinion.

Fake Herzog doesn’t like my analysis of American Empire from yesterday. I should point out that my actual thoughts on the subject of American empire are basically the same as Devin’s.

Speaking of foreign policy, at least we have victory in Libya.

In the 21st Century, even the bikers in biker gangs are sort of gay. We really do need classical masculinity.

Thus spaketh the tyrant: "My view is that what’s really needed is a political system and policy framework that display equal concern for the interests of all the members of the community."

American empire

Jonah Goldberg doesn’t like America being called an empire. This seems to be the crux of his argument:

Your typical empire invades countries to seize their resources, impose political control, and levy taxes. That was true of every empire from the ancient Romans to the Brits and the Soviets.

One could have an interesting discussion of whether or not America actually does impose political control. Mr Goldberg himself implies that we should not leave Iraq because its "democracy is fragile." Is not imposing democracy imposing political control?

But it’s more interesting to agree with his premises and follow his argument.

His premises are: 1) historically, most empires invade countries to advance their own interests; and 2) the US does not invade countries to advance its own interests (though it seemingly endlessly invades other countries).

This would seem to (obviously) raise the question of why the US invades so many countries.

Unfortunately, he has no answer, though he does reiterate that, "To say we did these things simply for plunder and power is an insult to all Americans, particularly those who gave their lives in the process."

But to say we did them for no apparent reason or interest is more insulting, no?

American resurgence

Ambrose Evans-Pritchard believes that the US is about to bounce back and achieve new awesome things.

As best I can tell, his argument is threefold: 1) America has a good chance of achieving "energy independence" due to shale oil and hydraulic fracturing; 2) re-insourcing (bringing back manufacturing jobs) is on the upswing; and 3) America has a relatively high fertility rate for a developed country.

An American resurgence may happen, but it won’t happen for any of these reasons. Energy independence is a stupid concept. Even if the US produces as much oil as it consumes, the price of oil will still be largely determined by production in the Middle East. Ultimately, the cost of energy is what matters, and if the only way to produce energy is to break rocks, energy is going to be expensive.

I’m skeptical about re-insourcing, but even if it is happening en masse, it’s too little, too late with respect to turning the American underclass into a middle class.

Fertility rates in aggregate in America are meaningless. What matters is who specifically is reproducing. Dysgenics reigns with respect to American reproduction rates.

Plus, America has lots of problems that these changes won’t solve. For example, Peter Thiel makes the "point . . . that the government is ‘huge’ but ineffective because it acts randomly." I’m not sure I would have used the word "random" but various government agencies certainly work in ways that run at cross-purposes to the actions of other government agencies, which may be worse than random.

Randoms

Statistics is not science.

Auster on America’s foreign policy.

Mangan on Zakaria:

Zakaria is a good example of one thing that immigration has done to this country. Rather than assimilate to American norms (whatever they are these days), Zakaria and other immigrant political entrepreneurs – Soros comes to mind – set about changing the nation in ways adverse to the native population. It all ends up like this: they end up lecturing you on the meaning and ideals of your own country, as well as telling you what you may or may not do with it.

Sonic Charmer:

Like the rest of you, I wake up daily with bated breath in anticipation of whether Europe will Technocratically Solve Its Financial Problems by sneaking through just the right clever accounting trick in a Summit With Important European People.

(He also had a very nice comment on my regulation post from yesterday)

OneSTDV:

I have to put this racial hissy fit in print because it’s just that good.

Public Discourse:

Women have abortions because (among other reasons) they are able to learn the sex of their unborn baby and kill her if she’s a girl.

Mises Blog:

The issue concerns: why does banking seem to be broken? The answer has to do with the ridiculously low interest rates. Banks are drowning in cash – tending toward 100% reserve by default.

People generally forget that the Fed has a triple mandate (not the oft-cited dual mandate). The Fed is supposed to ensure price stability (stop laughing), keep unemployment low, and regulate large financial firms. The third – oft-forgotten – mandate probably explains the Fed’s behavior better than the other two most of the time. Those who want more money printed these days forget that more money printed means even lower yields (assuming that’s possible). This becomes self-defeating as it makes banking less profitable and encourages banks to hoard cash.

Randoms of the day

Charles Murray (favorably) reviews David Brooks’ book in CRB (subscription required):

All people for whom some combination of family, community, and faith-along with vocation-are at the core of their happiness need to read this book. They will understand what a certain group of highly educated, affluent people, disproportionately from elite schools and with the modal political philosophy of Dutch sociologists, think constitutes a life well lived: a career that makes them important or at least semi-famous.

It is a variant on what I have elsewhere called the Europe Syndrome. The Europe Syndrome consists of the belief that a human being is a collection of chemicals that activates and, after a period of years, deactivates. The purpose of life is to pass the intervening time as pleasantly as possible. David Brooks’s presentation is a variant because it assigns high value to work, a legitimate source of deep satisfactions in life. Harold and Erica both labor really hard at their vocations and at their avocations. But otherwise they are trying to pass the time as pleasantly as possible. Their lives are almost entirely devoid of the other three sources of deep satisfaction-family, community, and faith.

Vox on intelligence.

Default is good for you. There really is no other way to purge the bad.

A modest proposal for marriage reform.

Regulatory stupidity of the day

There are too many people who say too many stupid things about regulations for me to possibly comment on all them. However, I’ll try to do more of it.

Today’s stupid statement is courtesy of Yglesias, who links to a graph of volatility of equity prices in the US and Germany. Apparently, we’re supposed to see the graphs, notice that the volatilities are highly correlated, and conclude that US regulations cannot be driving changes in equity prices in the US. The implicit additional premise is that US regulations don’t impact German firms.

Unfortunately, that implicit premise is badly mistaken.

The German volatility index in question is calculated on the DAX. The DAX is made up of "German" companies such as: Adidas, Bayer, BMW, Deutsche Bank, and Volkswagen. Obviously, these companies don’t do any business in the US at all and are therefore totally isolated from US regulations! (Note that Deutsche Bank, for example, owns the 8th largest bank holding company in the US).

A little closer to home, I’ve had meetings with lobbyists from 8 different countries on one rule that I’ve been working on. Any examination of lobbying records will show similar results.

Moreover, the regulatory uncertainty argument does not suggest that equity prices of the largest firms in different countries should be dis-similar during periods of uncertainty. Most of us that believe in the regulatory uncertainty argument believe that complex regulations favor large firms. As such, large German firms and large American firms may both benefit roughly equally due to regulatory uncertainty. Therefore, it’s not particularly surprising that their equity prices track each other pretty well.

Singapore: Island of HBD

I’ve been (very slowly) reading Lee Kwan Yew‘s memoirs. I’ll review it later, but there’s a bit I am compelled to post on now. Here’s Lee Kwan Yew:

On the night of 14 August 1983, I dropped a bombshell in my annual National Day Rally address. Live on both our television channels, with maximum viewership, I said it was stupid for our graduate men to choose less-educated and less-intelligent wives if they wanted their children to do as well as they had done. . . . It had taken me some time to see the obvious, that talent is a country’s most precious asset. . . .

The implications were grave. Our best women were not reproducing themselves because men who were their education equals did not want to marry them. . . .

This lopsided marriage and procreation pattern could not be allowed to remain unmentioned and unchecked. . . .

I quoted studies of identical twins done in Minnesota in the 1980s which showed that these twins were similar in so many respects. Although they had been brought up separately and in different countries, about 80 percent of their vocabulary, IQ, habits, likes and dislikes in food and friends, and other character and personality traits were identical.

Obviously, this caused a controversy. However, one Western academic stood up for Lee Kwan Yew . . . Richard Herrnstein (yeah, that guy).

Lee Kwan Yew also has realistic views on sex differences: “Women want to marry up, men want to marry down.”

He goes on:

But we should have foreseen that the better-educated would have two or fewer children, and the less-educated four or more. Western writers on family planning had not drawn attention to this already familiar though less stark outcome in their own mature countries because it was not politically correct to do so. . . .

Since that speech, I have regularly released the statistical analysis of the educational backgrounds of parents of the top 10 percent of students in national examinations. Singaporeans now accept that the better-educated and more able the parents, the more likely are the children to achieve similar levels.

Randoms of the day

Still commies.

Mencken: "Man can only achieve dignity if superior men are given absolute freedom to think what they want to think and say what they want to say."

More on commies from Borepatch

When conservatives and libertarians read stuff like this, they condemn government. The better response would be to get in on the good stuff.

Lots of studies show that people with kids are less happy than those without kids. People also complain that everyone seems to ignore these studies. I’m with Ulysses though. Having kids makes you more and less happy. Actually, everything that makes you really happy makes you unhappy for a while. If you don’t have to work at something a bit, it’s worthless (by definition).

All the smart people are suggesting that the Fed target nominal GDP instead of targeting inflation. This seems too clever to me, after all, nominal GDP is just GDP and inflation. Let’s say GDP shrinks by a billion dollars. Targeting NGDP means that you would print money until NGDP gets back the billion plus some amount (after all, we have to allow for constant progress and what is constant progress if not artificial increases in GDP?). Essentially, targeting NGDP gives the central bank a license to ignore inflation. "Who cares if inflation is 15%? We’re not targeting that, we’re targeting a level of NGDP?" You can almost hear Ben Bernank saying something like this. This idea fits with my general thesis that progress in macroeconomics is equivalent to proposing more irresponsible policies. Telling central banks to ignore inflation is retarded.

It’s important to remember that there isn’t enough money in Europe to bail out the sovereigns and the banks.

The bureaucracy pwns the education reformers. Efforts to reform the bureaucracy are always welcome, as far as I’m concerned, since they’ll always result in raising my salary.

Why America collapsed. You may also enjoy pictures from the 21st Century.

A theory of regulation

Tyler Cowen laid out a very weird theory of regulation:

The number of laws grows rapidly, yet the number of regulators grows relatively slowly. There are always more laws than there are regulators to enforce them, and thus the number of regulators is the binding constraint.

The regulators face pressure to enforce the most recently issued directives, if only to avoid being fired or to limit bad publicity. On any given day, it is what they are told to do. Issuing new regulations therefore displaces the enforcement of old ones.

If the best or most fundamental regulations are the ones issued first, over time the average quality of regulation will decline.

Let’s review what "a regulator" does (sticking to the federal level, since that’s what I’m familiar with).

As we were taught in basic civics (or social studies as it was called when I was in school), government has three functions: executive, legislative and judicial.

The modern regulator in USG performs all three of the roles. (Hint: this is the problem, not the number of regulators or regulations).

"Issuing new regulations" is a legislative function. I know you believe you vote for law-makers, but your notions of how your government works are stuck in the 19th Century.

Modern regulations are written vaguely since the agencies that write the rules are – in many cases – tasked with the judicial function as well. In other words, the guy that writes regulations also interprets them. Nice work if you can get it.

Modern regulators also serve an executive function, but this function is outsourced when possible, since it’s boring by comparison to the other two. For example, much of what happens on an airplane is required by FAA regulations. All procedures are followed even though I’ve never been on a plane with a regulator from the FAA as far as I know. Another example, changes to financial reporting rules are enforced during audit processes. To cut to the point, old regulations generally don’t need to be enforced as aggressively, since they’ve already become part of industry practice. I would be willing to argue that the executive function occupies the smallest portion of the average regulators time (though the line between executive and judicial gets blurred by the current practice).

Finally, Cowen claims that regulators are pressured to enforce recent regulations most strongly. This is wrong for 99% of regulations. Generally, the only people paying attention to a regulation (except in extreme cases) are the people being regulated. They generally want weaker regulations and weaker enforcement.

If you followed my explanation, you’ll see that our regulatory system is retarded. It polices itself according to its own rules, which it then judges. Worse, if policies fail, nothing happens. Failure and success, in fact, have identical pay outs (arguably failure is rewarded more highly). What we see here isn’t just retarded, it’s . You can’t change the number of regulators of the number of regulations in such a way to make such a system work. It’s broken by design.