Back in the 1960's my school had two Algebra classes for 7th-grade kids who showed some aptitude in math, and the rest of our age group took Algebra in 8th grade.
It's a sign of how education has regressed that no one is offered Algebra I in San Francisco in middle school, even if a student is capable. Worse, the deliberate holding back is being done in the name of equity. [bold added]
For years, San Francisco public schools have been caught up in a bitter debate over the district’s math curriculum. A vocal group of parents has argued that the district’s decision to delay teaching Algebra I until high school hobbles children who are ready to take the math course in middle school. But some experts and district leaders have argued that pushing back algebra can level the playing field for kids who are struggling in math.
This is what happens when you put Progressive ideologues in charge of education. They reduce inequality (how that ever become the objective instead of encouraging children to develop their individual gifts is baffling) by hamstringing the top performers, as opposed to lifting up those on the bottom.
This ideology would have a talented musician play basic chords until the tone-deaf can catch up, or have track athletes wear ankle weights so the slower kids can keep pace.
Give the advanced kids as much as they can handle, and offer extra help to those who are struggling--and here's an idea--try to make it fun.
Repairing downed power lines in March (Merc photo)
Pacific Gas & Electric has been criticized, principally for power outages and high rates, throughout the 50 years I've lived in California.
Since the year 2000 the utility has declared bankruptcy twice, because of rising fuel costs in 2001 and wildfire liabilities in 2019. However, the over-riding reason, IMHO, is that it's impossible to meet all the goals that the regulators have set for it; any unforeseen major problem was bound to put the company under.
Exhausted from listening to their criticisms, your humble blogger advocated a takeover of PG&E in 2019 by the Progressives so that they could show how to accomplish their conflicting goals:
force the complete conversion to alternative energy from fossil-fuel sources
bury more power lines both to prevent forest fires and to protect the public from downed lines.
The latest requirement is that PG&E has been tasked with a billing adjustment that affects millions of ratepayers in the name of "equity."
The changes would affect only those customers who receive electricity services from PG&E and its sibling power companies.
Here’s how the fixed charges would work in the PG&E service territory. The numbers are based on a four-person household:
Households earning less than $28,000 a year would pay a fixed charge of $15 a month on their electric bills.
Households with annual income from $28,000 to $69,000 would pay $30 a month.
Households earning from $69,000 to $180,000 would pay $51 a month.
Those with incomes above $180,000 would pay $92 a month.
Just how will PG&E determine its customers' income? Will it have access to and security for Franchise Tax Board data?
It's hard enough for businesses to determine pricing strategies for their products; will they now have to price differentially according to customers' income?
The Progressives who run the State government surely have the answers.
The argument is pretty simple, as laid out by Jacques Cesar, a former managing partner at Oliver Wyman now leading a research project for the management consultancy: The rich save more and are more willing to take the extra risk of putting their savings into stocks. Mr. Cesar calculates that one household earning $1 million a year would put about 20 times as much into stocks as the total invested by 20 households each with an income of $50,000, based on averages for their income groups, even though their overall income is the same. Raise inequality and demand for stocks goes up, and so do prices.
The rich not only save a greater percentage of their income, they also invest in riskier assets, e.g. stocks, that over time produce a higher return.
Every investor benefits from a rising stock market, but a rich investor benefits disproportionately more, putting even more distance from the rest of society.
The conventional wisdom is that the stock market makes millionaires out of startups' founders and creates inequality. But it also may be true that inequality causes the market to rise. If we do have a "virtuous circle," enjoy the ride
Despite all you may have heard from progressives ("The TCJA overwhelmingly benefited the rich and corporations while overlooking working families"), the Tax Cuts and Jobs Act of 2017 reduced wealth inequality: [bold added]
After showing steady rises in wealth inequality for nearly three decades, the data in the Federal Reserve’s Survey of Consumer Finance showed a decline in 2019, the first year that it was measured after the Tax Cuts and Jobs Act went into effect — suggesting there may be a connection.
“Every three years, the Federal Reserve releases detailed survey data on household assets and liabilities,” explained Jorge Barro, a fellow in public finance at Rice University’s Baker Institute. “This provides one of the best indications of the state of wealth inequality in the U.S. The data — the Survey of Consumer Finances — showed a persistent rise in wealth inequality between 1992 and 2016. A lot of people expected the TCJA to exacerbate wealth inequality, but the measurement in 2019 showed a contraction.”
“It’s low-frequency data,” said Barro. “The last observation was in 2016, before the TCJA. A lot of people expected the TCJA to exacerbate wealth inequality, but what happened is that wealth inequality contracted.”
A deeper look into household assets suggests a relative appreciation of lower-income housing values, according to Barro: “While financial wealth comprises a large share of capital, for many households the home is one of the largest components of wealth. As a result, shifts in relative home values can affect the distribution of wealth.”
“That’s exactly the shift that occurred between 2016 and 2019, as the share of total U.S. housing wealth declined for higher-income households,” he continued. “In particular, the top income quintile experienced a moderate decline in the share of housing wealth, while the bottom 40% of households, who were not as inclined to benefit from itemized deductions, experienced a relative improvement in the distribution of housing wealth.”
A number of measures in the TCJA had an effect on relative home values, according to Barro. These included the near doubling of the standard deduction, the reduction in the cap on mortgage interest deduction, and the SALT cap. “Together, these reduced subsidies related to home ownership and home valuation in a way that disproportionately raised the effective costs of homeownership for higher-income households,” he said.
“The availability and effectiveness of itemized deductions grows with the level of economic activity, and this tends to correlate positively with household income,” explained Barro. “Consequently, the increased standard deduction resulted in reducing the share of households benefiting from itemized deductions, and dampening the corresponding economic incentives. And the $10,000 cap on the deduction of taxes paid to state and local governments similarly affected the value of higher-income households disproportionally, especially given the huge property tax component in the SALT deduction. Likewise, the reduction in the maximum deductibility of interest on a mortgage loan from $1 million to $750,000 raised the effective cost of home ownership for higher-income households.”
Using IRS Statistics of Income data, Barro calculated the size of housing-related deductions as they changed with adjusted gross income. The results show that “higher AGI groups experienced larger relative declines in their average housing subsidies,” he said.
The SALT deduction is currently back in play in legislative proposals, Barro noted: “Some members of the Senate have said they wouldn’t favor any legislation unless the SALT cap were relaxed, so we can anticipate negotiations leading to a good chance of implementation in whatever bill gets passed. If it is passed it could once again exacerbate wealth inequality by reinstituting regressive housing subsidies.”
Comments:
Wealth is not income, the former being a more accurate measure of economic well-being. Here's one of many examples we could use to illustrate this point: assume a person has $10 million in cash but is ultra-conservative about risk. She invests all of the cash in 3-month Treasury bills, which yield .05% today. If she maintained that investment throughout the year (and the rates stayed the same), she would have annual interest income of slightly over $5,000 (assuming reinvestment), well below the income poverty line. Under no stretch of the imagination would she be considered poor, yet income measures would say she is.
The rich did get richer during the Trump years, but the poor, for the first time in three decades, started closing the gap. Isn't this the best way to lower inequality---not taking from Peter to pay Paul, but having poorer Paul catch up to Peter, who is also prospering?
The TCJA lowered the value of homes in high-tax coastal states on a relative basis to lower-cost homes in low-tax states. (Note the word "relative": the absolute price of homes in California is not going down, while home prices went up in the "flyover" states. Note also that this phenomenon began before the COVID-19 migration.) Housing is a much more significant component of wealth to lower-wealth households. Mr. Barro attributes the SALT limitation as a primary factor in shrinking the difference in housing wealth and therefore overall wealth.
Amidst all the tax increases proposed by a Democratic President and a Democratic Congress, a tax break for higher-income households in the infrastructure legislation is a repeal of the SALT limitation. The Democrats and their Progressive wing speak incessantly against inequality, yet they want to eliminate the SALT limitation, the most effective tax measure to reduce inequality in decades.
Full disclosure: the SALT limitation costs your humble blogger thousands of dollars in additional Federal taxes per year, yet I wish all of the politicians would go home for the rest of 2021 and not try to "help" us by spending any more money or tinkering with four-year-old tax changes that we haven't even figured out yet.
We take a break from the partisan wars to honor the life of Ruth Bader Ginsburg.
Chief Justice John Roberts: “Our Nation has lost a jurist of historic stature. We at the Supreme Court have lost a cherished colleague. Today we mourn, but with confidence that future generations will remember Ruth Bader Ginsburg as we knew her—a tireless and resolute champion of justice.”
Former President Barack Obama: "Over a long career on both sides of the bench — as a relentless litigator and an incisive jurist — Justice Ginsburg helped us see that discrimination on the basis of sex isn’t about an abstract ideal of equality; that it doesn’t only harm women; that it has real consequences for all of us. It’s about who we are — and who we can be."
The longer she lived, the wider her reach and the deeper the appreciation for her years on the bench. At the opening concert of the National Symphony Orchestra in Sept. 2019, Kennedy Center chair David Rubinstein introduced the dignitaries in the audience. When he got to the justice, women rose to applaud her. Then, the men quickly joined in until everyone in the hall was standing...
This wasn’t an audience of liberals, but a cross-section of the capital touched by a once-young lawyer who saw unfairness and quietly tried to end it during her 60 years of public service.
Today, our Nation mourns the loss of a trailblazer, not only in the field of law, but in the history of our country. Ruth Bader Ginsburg served more than 27 years as an Associate Justice of the Supreme Court of the United States. She was a loving wife to her late husband Martin, and a caring mother to her two children Jane and James.
Ruth Bader Ginsburg was an inspiration to all Americans. Having lost her older sister and mother before graduating high school, she entered law school as both a wife and a mother, and one of the few women in her class. After graduating from law school in 1959, she worked tirelessly for more than 34 years as a litigator and jurist and, in 1993, she became just the second woman to sit on the Supreme Court of the United States. Renowned for her powerful dissents at the Supreme Court, Justice Ginsburg epitomized powerful yet respectful argument; that you can disagree with someone without being disagreeable to them. Justice Ginsburg’s work helped bring about greater equality for women, secure rights for the disabled, and will continue to influence our Nation for generations to come. In addition to her quick mind, she brought flair to the bench with her stylish jabots and her warm friendships among colleagues, even those with whom she often disagreed, most notably with the late Justice Antonin Scalia.
A fighter to the end, Justice Ginsburg defeated cancer and the odds numerous times — all while continuing to serve on the Court. Her commitment to the law and her fearlessness in the face of death inspired countless “RBG” fans, and she continues to serve as a role model to countless women lawyers. Her legacy and contribution to American history will never be forgotten.
As a mark of respect for Ruth Bader Ginsburg, Associate Justice of the United States, I hereby order, by the authority vested in me by the Constitution and laws of the United States of America, including section 7 of title 4, United States Code, that the flag of the United States shall be flown at half-staff at the White House and on all public buildings and grounds, at all military posts and naval stations, and on all naval vessels of the Federal Government in the District of Columbia and throughout the United States and its Territories and possessions until sunset, on the day of interment. I also direct that the flag shall be flown at half-staff for the same period at all United States embassies, legations, consular offices, and other facilities abroad, including all military facilities and naval vessels and stations.
IN WITNESS WHEREOF, I have hereunto set my hand this eighteenth day of September, in the year of our Lord two thousand twenty, and of the Independence of the United States of America the two hundred and forty-fifth.
“For a finite-size flow system to persist in time (to live), it must evolve with freedom in such a way that it provides easier access to the imposed currents that flow through it.” [Blogger's comment: Huh?]
In layman’s terms, that means all shape and structure—all “design” in nature—evolves in a predictable direction: toward facilitating the movement of whatever flows through it. Designs evolve by configuring and reconfiguring themselves to move more stuff more easily. The world around us reveals a story of movement, flow, life, order and change.
Your humble blogger had previously never heard of Adrian Bejan or constructal law, which the J. A. Jones Distinguished Professor of Mechanical Engineering at Duke University discovered 24 years ago.
Why are there tree-like structures in our circulatory systems? Darwinists would attribute them to evolution. Professor Bejan saw them in both the organic and inorganic worlds, "the treelike shapes that abound in nature—in lightning bolts and river basins, in our circulatory systems and the neural networks of our brains."
The new flow-science is beyond tree designs, and once you look for flows, you notice them everywhere:
“This new physics is not strictly about tree-shaped flows. It is about all the morphing architectures that are macroscopic, free, observable and measurable—for example, the round cross-sections we find in blood vessels, subterranean rivers and the tunnels dugs by worms; or the seemingly precise rhythms of breathing, running, wings flapping, flags waving and smoke plumes dancing. The science of form comes predictively from principle, not from analogy. Evolution is physics, not opinion.”
Professor Bejan has also applied constructal law to human behavior.: [bold added]
economic and social inequality is the inevitable result of physical laws. “Hierarchy is not imposed, it is natural,” he says. “Equality, however, is artificial, because it violates the law of evolution in nature.”
Mr. Bejan emphasizes that he does not mean this as a political statement or a moral defense of inequality: “Physics is not about justice or fairness, but about what happens in nature.” The “physics origin” of inequality, he says, “is that nothing moves unless it is pushed. Pushing comes from power, and power comes from fuel for machines and food for animals. Fuel use is the physics measure of movement, and, like movement, fuel use is distributed nonuniformly around the globe.
“Next, because the amount of fuel consumed annually by a population is directly proportional to its annual wealth, the GDP, the life movement of a population—the economy—becomes hierarchical naturally, with a few large and many small movers. So physics and economics are two sides of the same coin. The same hierarchical-flow architecture accounts for both.”
Harnessing that power rather than fighting it, Mr. Bejan argues, is a better way of helping the disadvantaged. “If we think about inequality as a physical phenomenon, perhaps that can inform the discussion, so that instead of trying to erase these differences, we can see how to connect the slow-moving pockets of society to the big-flow architecture,” he says. “Artificial constraints that limit the freedom of a system to change might work for a while. But they are ultimately doomed because they are not just fighting against the will of the people but the laws of physics.”
Systems must evolve and build on the designs already in place. Thus it is folly to think one can impose radically new political and economic systems on different nations. It’s not just the lack of a specific political tradition and the absence of the channels needed to move people, ideas and goods, Mr. Bejan says: “The chief impediment is the absence of a culture that encourages and rewards freedom to question authority, to speak up, inquire, innovate and implement change.”
Imposing taxes, subsidizing "affordable housing", and enforcing ever-stricter regulations are examples of pro-equality measures that go against the powerful forces of nature. It would be easier to help the "slow-moving pockets" join, rather than stymie and divert, the flow. Recent politics has been riven by the question of who is on the right side of history. Adrian Bejan says that we should be on the right side of science.
Lawyer/journalist/publisher Steven Brill asks the painful question:
How did we get here? How did the world’s greatest democracy and economy become a land of crumbling roads, galloping income inequality, bitter polarization and dysfunctional government?
Mr. Brill doesn't attribute America's current state to evil people but to the unintended consequences of a meritocratic system:
The story of America’s tailspin is not about villains, though there are some. It is not about a conspiracy to bring the country down, nor did it spring from one single source....
The Meritocracy’s ascent was about more than personal profit....it may be understandable for those on the losing side of this triumph of the achievers to condemn the winners as gluttons. That explanation, however, is too simple. Many of the protected class are people who have lived the kind of lives that all Americans celebrate. They worked hard. They innovated. They tried things that others wouldn’t attempt. They believed, often correctly, that they were writing new chapters in the long story of American progress.
Sure, the boomers who made it to the top were smart and worked hard, but now they are using the advantages of wealth, education, and social connections to create a new aristocracy. Elites
can spend what they need to in order to send their children to the best schools, provide tutors for standardized testing and otherwise ensure that their kids can outcompete their peers to secure the same spots at the top that their parents achieved.
Mr. Brill calls for bigger government to help the majority of Americans in the "unprotected" class. [bold added]
Your humble blogger has always been of the opinion ("belief" is too strong a word) that massive government redistribution efforts create more problems than solutions. I still hold out hope that eliminating suffering and providing a decent life for the majority who can't make it is possible through a combination of technological advancement and the voluntary actions of the rich, but it just may be that the problems are too vast to overcome without bigger government. I'm not in Mr. Brill's corner....yet.
Whether he planned it or not, recent economic developments have helped Donald Trump in his battle with coastal elites.
One source of wealth, high-end real estate, will stop increasing and may even fall. The Tax Cut and Jobs Act reduces the deductions for state and local taxes and for mortgage interest. The elimination of these tax subsidies may well cool off the overheated real estate market in New York and California.
The drop in the stock market, whether due to the threat of a trade war, Facebook's woes, higher interest rates, political uncertainty, or all of the above, hammers the other major source of wealth for the coastal elites.
It's ironic that these developments will reduce the stark economic wealth inequality of the coasts versus middle America much more than occurred under President Obama, yet Donald Trump will never get a smidgeon of credit from progressives.
Related: it's time for Costco's semi-annual sale on Spam, so I picked up a package. Less steak, more spam--time to watch my pennies.
Recently your humble blogger found himself at a car repair shop where guys were standing around jawing about what the untrained eye would regard as junk auto parts. The issue was whether a Volvo engine could be salvaged, but the conversation ranged far afield.
Mr. Damore asserted that the difference in performance in computer engineering between the sexes (in general, in general, ok?) can't all be attributed to sex discrimination and structural barriers. My limited experience does not contradict his thesis; I know some outstanding women in jobs that require hard math and science, but they are rare. Mr. Damore did not polemicize and is being lambasted in part because his piece is not up to professional writing standards. IMHO he didn't deserve to be fired.
No one is complaining about sex discrimination in the low-status profession of auto repair. The guys I know in this business like what they are doing and started at an early age. This Saturday morning I didn't see any women talking about exhaust manifolds or head gaskets.
It's not offensive to attribute innate sex differences to the people who go in to auto repair, but it is for computer science; oh well, when everyone is replaced by robots it won't matter.
Related: every guy in America fell in love with Marisa Tomei when she spouted car speak in the courtroom (and captured the Academy Award because of it). I daresay that scene would be as incongruous today as it was in 1992.
Most religions believe in the immutability of human nature. But religions themselves have changed for the better. How do we know this? Not one today practices human sacrifice, which was commonplace in the ancient world.
Besides appeasing the gods, human sacrifice had another effect; it cemented social stratification, i.e., inequality, in the societies that practiced it. [bold added]
The researchers found that human sacrifice was widespread in Austronesia, occurring in 25% of egalitarian cultures, 37% of moderately stratified societies and a whopping 67% of highly stratified cultures. Stratification and human sacrifice were clearly linked—but did one cause the other? [snip]
They found that the practice [of human sacrifice] had a twofold impact, historically, on Austronesian societies: It made them significantly less likely to turn in an egalitarian direction and significantly more likely to become more hierarchical. In other words, the ritualistic sacrificing of humans seems to have stabilized and deepened social inequalities.
Despite melodramatic legends of tribes sacrificing their chiefs to the gods once they got over the hill, the reality appears to have been different. In Austronesia, the new research confirms, the message to those of low status was none too subtle: Don’t cause trouble, or yours may be the heart that the gods just happen to pick as a pleasing gift at the next ceremony.
Human sacrifice and inequality? What barbarians those people were!
He's got game: Dan Price was recognized before the 2015 firm-wide pay raise.
Gravity Payments CEO Dan Price attracted scads of favorable publicity when he raised his 120-employee firm's minimum wage to $70,000. To help fund the cost increase he cut his own $1 million salary. Now the company is facing difficulties, though it is not (yet) in extremis. The NY Times [bold added]:
a few customers, dismayed by what they viewed as a political statement, withdrew their business. Others, anticipating a fee increase — despite repeated assurances to the contrary — also left. While dozens of new clients, inspired by Mr. Price’s announcement, were signing up, those accounts will not start paying off for at least another year. To handle the flood, he has already had to hire a dozen additional employees — now at a significantly higher cost — and is struggling to figure out whether more are needed without knowing for certain how long the bonanza will last.
Two of Mr. Price’s most valued employees quit, spurred in part by their view that it was unfair to double the pay of some new hires while the longest-serving staff members got small or no raises. Some friends and associates in Seattle’s close-knit entrepreneurial network were also piqued that Mr. Price’s action made them look stingy in front of their own employees.
Then potentially the worst blow of all: Less than two weeks after the announcement, Mr. Price’s older brother and Gravity co-founder, Lucas Price, citing longstanding differences, filed a lawsuit that potentially threatened the company’s very existence. With legal bills quickly mounting and most of his own paycheck and last year’s $2.2 million in profits plowed into the salary increases, Dan Price said, “We don’t have a margin of error to pay those legal fees.”
Comments:
The high-performers, unappreciated in recognition and/or pay, depart for greener pastures, while the low-perfomers clock in for their $70,000 salary. Thus do most socialist dreams fail.
Mr. Price is an admirable person, clearly sacrificing personal gain for his beliefs.
He has the right to run the company the way he sees fit, and customers and employees have the right to do business with him based on their beliefs, as well as the price and quality of the services they receive. The trouble is that so many people became invested in his success or failure based upon ideology, not whether his company is delivering a quality product at a reasonable price.
Let's withhold judgment: we still don't know that failure will be the final outcome. The glory of capitalism is that millions of people are all trying to find a better way, and often success comes in unexpected ways that we can all learn from.
