Part of the push to help the oppressed and save the plant is push to decrease the birthrate both in the developed and undeveloped world. Putting of childbirth is supposed to lead to a more meaningful life, while academic excellence is considered meaningful. Child-raising is considered male oppression of women, while writing mediocre poetry is, we’re told elevating, it’s finding your voice. It’s the new mood, at least in the developed world.
In the undeveloped world, political activism and wealth accumulation are presented as more meaningful, and fewer children is presented as a responsible route to wealth and happiness (see Indian advertisement below). My sense is otherwise, that children bring happiness and long term wealth. My sense is that the best two ways to change the world for the better is to work on yourself and to raise good children. And these Idas are connected; children are little mirrors, sometimes showing hidden flaws, sometimes revealing enthusiasm and greatnesses.
This month’s cover article of National Geographic includes economic justifications for fewer children and ecological justifications. Apparently we’re making life difficult for the polar bears. The assumption is that the bears like it cold, and their opinion is more important than that of animals that like it warm, like most humans.
There is also an assumption that there will be more jobs and better food if we have fewer children, or that people will be happier. Who are the “we” who are better off. I personally would not trade a billion randomly selected lives to lower the earth’s temperature 1 degree, or for the supposed happiness benefit of 1 million empty-nest households.
Rents in New York and San Francisco are far less expensive than before the pandemic. It’s been a boon for the suburbs, the south and the midwest, one that’s likely to continue unless Biden steps in. Before the pandemic, rent in San Francisco for a one bedroom apartment averaged over $3700 per month. New York rent was similar. People paid it because these cities offered robust business and entertainment, the best restaurants and bars, the best salons and clubs, the best music, museums, universities, and theater. New York was Wall Street, Madison Avenue and Broadway; San Francisco was Silicon valley and Hollywood. These cities were the place to be, and then the pandemic hit.
Post COVID-19, the benefits of big city life are gone, and replaced by negatives. The great restaurants are mostly gone; the museums, theaters, and salons, shut along with Hollywood. Wall Street and Madison Ave have gone on-line, as have the universities. If you can work and study from anywhere, why do it from an expensive hotbed of Corona.
People of means left the big cities with the first lockdowns. Wall Street moved on line, with offices in New Jersey, and many followed, along with college students, and hotel and restaurant workers. New York’s unemployment rate increased from 4-5% to over 9.5% today, among the highest rates in the nation, 9.5%. It would be higher if not for the departures. Crime spiked; the murder rate doubled. To keep people from leaving, landlords have lowered rents and many will now forgive a month or two of rent to keep apartments full with some rent coming in and an illusion of exclusivity. This is good for tenants, but tough on landlords.
Detroit rent history, 2014 to January 2021. Rents fell a lot on election day, maybe because of Biden, or because we think the pandemic is over.
As things stand, the suburbs and smaller cities are the beneficiaries of the exodus. Among the cities benefiting the most are cities in the south and mid-west: states that are more open and are relatively low cost: Phoenix, Oakland, Cleveland, St. Petersburg, and even Detroit. Detroit’s rents were already moving up as auto manufacturing returned from Mexico, see chart. Between early 2017 and October 2020, they went from $500/month to $1250/month for a 1 bedroom apartment, according to Zumper. Detroit rents fell after election day, but are still up 20% on the year. The influx of wealthier working folk to Detroit is welcome to some, unwelcome to tenants who find their rents are raised. I think it’s is a sign of a healthy economy that people follow life-quality, and that rents follow people. Our landlords are happy, but there are a lot of Detroit renters who are not
Joe Biden has promised to step in to make things right for everyone. He promised to have the government pay people’s rent so they don’t get evicted. I presume that means paying about double to people in NY and SF as to those in Detroit. He claims he will shutter smokestack industries too, and create the good jobs of the future in computers and high tech. It’s a nice claim. I suspect it’s a bailout of big city landlords, but what would I know. I suspect that the US would be better off if Joe just sat back and let New York rents fall, while allowing Detroit to gentrify. Detroiters need not worry about rents getting too pricy here. We’ve1500 shootings per year, that 15 times more than NYC, per capita. Unless that ratio changes, Detroit will continue to be the lower rent city.
Philip Schuyler as a Major General in the Revolution. His statue was removed.
What most folks know about Alexander Hamilton’s father in law, Philip Schuyler, is that he was “loaded”, that he had three daughters, and that he quickly took to young Alexander. But an important fact varnished over is that Schuyler made his money in the slave trade, a trade that Hamilton was likely in when he met the young Schuyler daughters. Schuyler was also a slave owner, owning 13 slaves, by his record, and perhaps another 17 indentured servants working at two mansions. So far, only the Philip Schyler statue has been taken down. It seems possible that many monuments to Hamilton may follow.
Statue of Alexander Hamilton, proudly stands in front of Columbia University. The ten dollar founding father.
The play “Hamilton” proclaims Hamilton’s genius and exceptional work ethic, mentioning that, at the young age of 14 (more likely 16) he was left in charge of a trading company. This was for 5 months in 1771, while the owner was over seas doing business. Hamilton knew the business well; he’d been hired as a clerk at 11 at Beekman and Cruger, a similar import-export trading firm. What items did these firms trade — cotton, sugar, rum, and most profitable slaves. This likely was the business that kept the owner overseas for 5 months while Alexander ran the shop. There are at least two notifications of slave ships entering the harbor with human good for sale. Among Hamilton’s likely jobs would have been fattening and oiling the goods for sale. Hamilton himself seems to have owned a slave-boy named Ajax who he inherited (briefly) from his mother, Rachel. His mother is listed on the tax records as white. She owned five saves at one time, suggesting she was not entirely impoverished. Hamilton’s father, though a failed businessman, was a Scottish Laird (a Lord). As for the court-mandated transfer of Ajax from Alexander, it was to his half-brother James because James was “Legitimate.”
I base Hamilton’s age on the Nevis-St Kitts record of his birth, January 11, 1755.”[1] The play takes as a fact Hamilton’s claim to have been born two years later, January 11, 1757. I trust the written records here, and imagine Hamilton wanted to present himself as a young genius, rather than as a bright, but older fellow. In 1772, at at age 17, Hamilton wrote a “fire and brimstone” description of a deadly hurricane, describing it as “divine rebuke to human vanity and pomposity.”[2] Between this, and his skill at trading, the community leaders collected money to send him to New York, but unlike the play’s description, it was not only for further education. The deal was that he continue trading for the firm,[3] and this is likely how he met his future father in law. “[4]
In New York, Hamilton met Schuyler and his daughters. It seems likely that he met the father first, likely as possible customer for the slave trade from the Caribbean, or perhaps as a customer for rum and sugar. A 1772 letter in Hamilton’s handwriting [4] asks for the purchase of “two or three poor boys” for plantation work, “bound in the most reasonable manner you can.” As in the play, Hamilton was friends with John Laurens, an abolitionist, and among his first lodgings was with Hercules Mulligan, a tailor’s apprentice. Hercules is presented as black in the play, but he was quite white (see picture) with a black slave, Cato. Cato ran most of the messages. According to the play, “I’m joining the rebellion cuz I know it’s my chance To socially advance, Instead of sewin’ some pants, I’m taking my shot. No, Hercules was socially advanced ,married into the British Admiralty, even. He was a true believer in freedom and a slave-holder. His older brother, Hugh Mulligan, was one of the traders that Hamilton was supposed to work with.[5] As for Laurens and his anti-slavery organization, most of those in the organization owned slaves, and though they opposed slavery, they could never decide on when or how to end it. There is no evidence that Cato was ever set free.
The appointment to Washingtons staff was not likely a coincidence. The elder Schuyler was one of the four top generals appointed in 1775 to serve directly under Washington. Phillip oversaw, at a distance, the disastrous attack on Quebec and the victory at Saratoga– both, Burr served admirably. Phillip’s main role was as a quartermaster/supplier, and this is not a small role. Phillip Schuyler had been a quarter-master in the French and Indian war. It’s likely that it was Schuyler who got Hamilton his appointment to Washington’s staff.
Once on Washington’s staff, Hamilton served admirably. Originally serving as a secretary, Hamilton wrote many of Washington’s dispatches. Then, according to tradition, as a cannon commander, he took particular pleasure in the attack on Princeton University. He then served well as secretary of the Treasury, and as head of the Bank of The United States, the only major US bank until Burr opened the Bank of the Manhattan company. Despite his aversion to slavery, Hamilton also continued to deal in slaves. A 1796 cash book entry records Hamilton’s payment of $250 to his father-in-law for “2 Negro servants purchased by him for me.” This is only 3 years before 1799, when New York began to end slavery in the state with the Act for the Gradual Abolition of Slavery. Children of slaves born after July 4, 1799, were to be legally free, but required indentured servitude: to age 28 for males and 25 for females. Those born before July 4, 1799 became free in 1817. There is no evidence that Hamilton was a leader in any of this, but Burr, another slave-owning abolitionist, was a leader in the NY legislature at the time.
I’m with Burr.He was flawed, a slave-owning abolitionist, but vehimently against the Alien and Sedition Acts, a Hamiltonian horror.
It seems that Robert Morris introduced Hamilton to the importance of tariffs, and to the idea of using debt service as a backing to currency. It’s brilliant idea, but Hamilton understood it and took to it. Hamilton also understood the need for a coast guard to enforce the tariffs. As for Hamilton’s character, or Burr’s. Both, in my understanding, were imperfect people who did great deeds. I’ve already written that Hamilton was likely setting up Burr for murder, perhaps because of Burr’s vehement opposition to the Alien and Sedition Acts — That’s why Hamilton wore his glasses and fiddled with the gun so much. Burr was also gaining power through his Manhattan corporation and Tammany organization. both of which got his support among the immigrants.
My intent here is not to knock the image of Hamilton, Schuyler, Laurens and Mulligan, nor to raise that of Burr, but to correct some current fictions in the play “Hamilton”, and to fight a disease of our age, the cancel culture. The cancel culture elevates their heroes (Hamilton, Mulligan) to god-status. They will lie to cover the flaws of their heroes, and will lie also to claim a drop of black blood in them; neither Hamilton nor Mulligan were black and both owned slaves, as did Burr. The other side of the cancel culture is to cancel — to eliminate the validity — of the reactionaries, the non-revolutionary. In the play, these include Samuel Seebury and Aaron Burr. Great building is almost always the work of contradictory people. They need some talent, and a willingness to act, and because building requires a group, they have to work in a group, tolerating flaws of the others in the group. It is just these flawed, contradictory builders that are being cancelled, and I don’t think that’s right or healthy.
“Riding on the City of New Orleans Illinois Central Monday morning rail Fifteen cars and fifteen restless riders Three conductors and twenty-five sacks of mail All along the southbound odyssey The train pulls out at Kankakee Rolls along past houses, farms and fields Passin’ trains that have no names Freight yards full of old black men And the graveyards of the rusted automobiles…”
Every weekday, this train leaves Chicago at 9:00 PM and gets into New Orleans twenty hours later, at 5:00 PM. It’s a 925 mile trip at a 45 mph average: slow and money-losing, propped up by US taxes. Like much of US passenger rail, it “has the disappearing railroad blues.” It’s a train service that would embarrass the Bulgarians: One train a day?! 45 mph average speed!? It’s little wonder is that there are few riders, and that they are rail-enthusiasts: “the sons of Pullman porters, and the sons of engineers, Ride[ing] their father’s magic carpets made of steel.” The wonder, to me was that there was ever fifteen cars for these, “15 restless riders”.
A sack of mail being picked up on the fly.
I would be happy to see more trips and a faster speed, at an average speed of at least 60 mph. This would require 85 mph or higher between stops, but it would save on salaries, and it would bring in some new customers. But even if these higher speeds cost nothing extra, in net, you’d still need something more to make the trip profitable; a lot more if the goal is to add another train. Air-traffic will always be faster, and the automobile, more convenient. I find a clue to profitability in the fifteen cars of the song and in the sacks of mail.
Unless I’m mistaken, mail traffic was at least as profitable as passenger traffic, and those “twenty-five sacks of mail” were either very large, or just the number on-loaded at Kankakee. Passenger trains like ‘the city of New Orleans’ were the main mail carriers till the late 1970s, a situation that ended when union disputes made it unprofitable. Still, I suspect that mail might be profitable again if we used passenger trains only for fast mail — priority and first class — and if we had real fast mail again. We currently use trucks and freight trans for virtually all US mail, we do not have a direct distribution system. The result is that US mail is vastly slower than it had been. First class mail used to arrive in a day or two, like UPS now. But these days the post office claims 2 to 4 business days for “priority mail,” and ebay guarantees priority delivery time “within eight business days”. That’s two weeks in normal language. Surely there is room for a faster version. It costs $7.35 for a priority envelope and $12.80 for a priority package (medium box, fixed price). That’s hardly less than UPS charges.
Last day of rail post service New York to Washington, DC. .June 30, 1977.
Passenger trains could speed our slow mail a lot, if it were used for this, even with these slow speeds. The City of New Orleans makes this trip in less than a day, with connections available to major cities across the US. If priority mail went north-south in under one day, people would use it more, and that could make the whole operation profitable. Trains are far cheaper than trucks when you are dealing with large volumes; there are fewer drivers per weight, and less energy use per weight. Still there are logistical issues to making this work, and you want to move away from having many post men handling individual sacks, I think. There are logistical advantages to on-loading and off-loading much larger packages and to the use of a system of standard sizes on a moving conveyor.
How would a revised mail service work? I’d suggest using a version of intermodal logistics. Currently this route consists of 20 stops including the first and last, Chicago and New Orleans. This suggests an average distance between stops of 49 Miles. Until the mid 70s, , mail would be dropped off and picked up at every stop, with hand sorting onboard and some additional on-off done on-the-fly using sacks and hooks, see picture above. For a modern version, I would suggest the same number of passenger stops, but fewer mail pick ups and drop offs, perhaps only 1/3 as many. These would be larger weight, a ton or more, with no hand sorting. I’d suggest mail drop offs and pick ups every 155 miles or so, and only of intermodal containers or pods: ten to 40 foot lengths. These containers plus their contents would weigh between 2,500 and 25,000 pounds each. They would travel on flatcars at the rear of the passenger cars, and contain first class and priority mail only. Otherwise, what are you getting for the extra cost?
The city of New Orleans would still leave Chicago with six passenger cars, but now these would be followed by eight to ten flatcars holding six or more containers. They’d drop off one of the containers at a stop around the 150 mile mark, likely Champaign Urbana, and pick up five or so more (they’d now have ten). Champaign Urbana is a major east-west intermodal stop, by the way. I’d suggest the use of six or more heavy forklifts to speed the process. At the next mail-stop, Centralia, two containers might come off and four or more might come on. Centralia is near St. Louis, itself a major rail hub for trains going west. See map below. The next mail stop might be Memphis. Though it’s not shown as such, Memphis is a major east-west rail hub; it’s a hub for freight. A stripped down mail-stop version of passenger train mail like this seems quite do-able — to me at least. It could be quite profitable, too.
Amtrak Passenger rail map. The city of New Orleans is the dark blue line going north-south in the middle of the map.
Intermodal, flat-bed trucks would take the mail to sorting locations, and from there to distribution points. To speed things, the containers might hold pre-sorted sacks of mail. Intermodal trucks might also carry some full containers east and west e.g. from Centralia to St. Louis, and some full flatcars could be switched on and off too. Full cars could be switched at the end, in New Orleans for travel east and west, or in the middle. There is a line about “Changing cars in Memphis Tennessee.” I imagine this relates to full carloads of mail joining or leaving the train in Memphis. Some of these full intermodal containers could take priority mail east and west. One day mail to Atlanta, and Houston would be nice. California in two days. That could be a money maker.
At this point, I would like to mention “super-fast” rail. The top speeds of these TGV’s “Transports of Grande Vitess” are in the range of 160 mph (265 km/hr) but the average speeds are lower because of curves and the need to stop. The average speeds are roughly 125 mph on the major routes in Europe, but they require special rails and rail beds. My sense is that this sort of special-use improvement is not worth the cost for US rail traffic. While 60 -90 mph can be handled on the same rails that carry freight, the need for dedicated track comes with a doubling of land and maintenance costs. And what do you have when you have it? The bullet rail is still less than half as fast as air travel. At an average speed of 125 mph, the trip between Chicago and New Orleans would take seven hours. For business travelers, this is not an attractive alternative to a two hour flight, and it is not well suited for intermodal mail. The fuel costs are unlikely to be lower than air travel, and there is no easy way to put mail on or off a TGV. Mail en-route would slow the 125 mph speed further, and the use of intermodal containers would dramatically increase the drag and fuel cost. Air travel has less drag because air density is lower at high altitude.
Meanwhile, at 60 mph average speeds, train travel can be quite profitable. Energy use is 1/4 as high at 60 mph average as at 120 mph. An increase of average speed to 60 mph would barely raise the energy use compared to TGV, but it would shorten the trip by five hours. The new, 15 hour version of “The City of New Orleans” would not be competitive for business travel, but it would be attractive for tourists, and certainly for mail. Having fewer hours of conductor/ engineer time would save personnel costs, and the extra ridership should allow the price to stay as it is, $135 one-way. A tourist might easily spend $135 for this overnight trip: leaving Chicago after dinner and arriving at noon the next day. This is far nicer than arriving at 5:00 PM, “when the day is done.”
Robert Buxbaum, June 21, 2019. One summer during graduate school, I worked in the mail room of a bank, stamping envelopes and sorting them by zip code into rubber-band tied bundles. The system I propose here is a larger-scale version of that, with pre-sorted mail bags replacing the rubber bands, and intermodal containers replacing the sacks we put them in.
Here is a classic math paradox for your amusement, and perhaps your edification: (edification is a fancy word for: beware, I’m trying to learn you something).
You are on a TV game show where you will be asked to choose between two, identical-looking envelopes. All you know about the envelopes is that one of them has twice as much money as the other. The envelopes are shuffled, and you pick one. You peak in and see that your envelope contains $400, and you feel pretty good. But then you are given a choice: you can switch your envelope with the other one; the one you didn’t take. You reason that the other envelope either has $800 or $200 with equal probability. That is, a switch will either net you a $400 gain, or loose you $200. Since $400 is bigger than $200, you switch. Did that decision make sense. It seems that, at this game, every contestant should switch envelopes. Hmm.
The solution follows: The problem with this analysis is an error common in children and politicians — the confusion between your lack of knowledge of a thing, and actual variability in the system. In this case, the contestant is confusing his (or her) lack of knowledge of whether he/she has the big envelope or the smaller, with the fixed fact that the total between the two envelopes has already been set. It is some known total, in this case it is either $600 or $1200. Lets call this unknown sum y. There is a 50% chance that you now are holding 2/3 y and a 50% chance you are holding only 1/3y. therefore, the value of your current envelope is 1/3 y + 1/6y = 1/2 y. Similarly, the other envelope has a value 1/2y; there is no advantage is switching once it is accepted that the total, y had already been set before you got to choose an envelope.
And here, unfortunately is the lesson:The same issue applies in reverse when it comes to government taxation. If you assume that the total amount of goods produced by the economy is always fixed to some amount, then there is no fundamental problem with high taxes. You can print money, or redistribute it to anyone you think is worthy — more worthy than the person who has it now – and you won’t affect the usable wealth of the society. Some will gain others will lose, and likely you’ll find you have more friends than before. On the other hand, if you assume that government redistribution will affect the total: that there is some relationship between reward and the amount produced, then to the extent that you diminish the relation between work and income, or savings and wealth, you diminish the total output and wealth of your society. While some balance is needed, a redistribution that aims at identical outcomes will result in total poverty.
This is a variant of the “two-envelopes problem,” originally posed in 1912 by German, Jewish mathematician, Edmund Landau. It is described, with related problems, by Prakash Gorroochurn, Classic Problems of Probability. Wiley, 314pp. ISBN: 978-1-118-06325-5. Wikipedia article: Two Envelopes Problem.
We generally compare the wealth of nations in dollars per capita, but this is a false comparison. You can not eat dollars, and even if dollars can be exchanged for products or other countries’ currencies with minimum cost, the same is not true for their products. A sack of rice in America costs more than in India; you can not easily buy it at the Indian price. Nonetheless we generally measure the wealth of a county as if all products cost the same everywhere. Based on this, we declare that the citizens of Lichtenstein are the richest on the planet, followed by Norway and Denmark. US citizens not far behind, vastly richer than the people of Africa who we picture living on pennies per day. But pennies in Africa buy more than pennies in America; wealth is spent locally, and things are expensive where people have money.
GDP for various countries in pints of beer per person per year in main city bar or restaurant
To correct for this local value of money effect, some economists modify consider the ratio of per-capita GDP by relation to the cost of a basket of goods. This is called purchasing power parity, or ppp. By this measure, American’s are not as much richer than Africans, but the problem remains that people don’t all buy the same basket of goods. The Economist magazine has thus suggested correcting ppp by choosing a single consumable, the MacDonald’s Big Mac, a standard product available world-wide. The Economist’s “Big Mac Index” is quite good in my opinion, but it could be better, and I decided to make it better by using beer instead of Big Macs.
It strikes me that typical Africans don’t eat Big Macs — the price is out of range. Meanwhile, in rich countries mostly it’s the poor who eat MacDonald’s (and Donald Trump). The advantage of using beer to measure the wealth of nations is it’s something most-everyone consumes across all social strata. A country is wealthy in terms of many pints of beer a person can buy based on his or her, per-capita GDP.
Shown at left is the top countries from a table I made by dividing the GDP per capita by the price of a pint (or half-liter) of local beer as served in a tavern or restaurant of the major city. Measured this way I find Lichtenstein is still the richest country on earth, now followed by Saudi Arabia and the Czech Republic. Norway is no longer among the richest countries — beer is expensive there, as is labor. The Czech Republic, normally considered a middle-to-poor country, is number 3 because of the low cost of its excellent beer. The US is several stages down, just below Denmark, and barely above Hungary and Kazakhstan. The socialist countries: Russia, Cuba, and Venezuela are as poor in beer as they are in dollars. Socialism distributes wealth without creating it.
Number of beers one can buy on a month’s minimum wage in Europe, by Reddit:adilu.
By now you’re wondering about my use of per-capita GDP. Perhaps a better comparison — one where socialism looks better would involve the minimum wage. At right I show a map of Europe in terms of the number of beers one can buy per month based on 40 hour weeks at the minimum wage. Several countries are greyed out: Italy, Austria, Sweden, Finland, Lichtenstein, etc. These are mostly rich countries bu have no minimum wage. Based on the data, Belgium’s working classes are the best off, with Ireland and England not far behind. Germany’s workers look like they are doing well, but they don’t really have a minimum wage (the chart, by Reddit editor adieu assumes one based on a proposal). The United States’s minimum worker is poorer in beer (327/month) based on a minimum wage of $7.85 and an average cost of beer about $4/pint (bar + supermarket). He is richer than the French, Poles, Italians, Norwegians, Danes, Austrians and Swedes in beer, and better off than the Turks and Russians too. It’s clear that high minimum wages harm community wealth and job prospects. Though some at the bottom of the work scale are left dry at the bar.
Robert Buxbaum, July 18, 2018. I write these blogs to help me think. If you’d like to see more of the wealth of nations in beer, I’ll be happy to provide.
The wealth of the mean American household has dropped significantly since 2007, a result of the general de-industrialization of America. It’s not that America has gotten poorer, but in the last 8 years we’ve increased the economic divide, enriching the richest few percent while leaving behind the working and bourgeoise classes. We are beginning to come back, but a particularly nasty legacy remains, especially among black families. Some 47% of black families have no liquid savings — a far greater fraction than in 2007. The lack of savings also appears in white families (19%), and Hispanics (41%), but it’s most desperate among blacks.
College graduation rates have increased among black students, and along with the increase there has been an increase in salaries, but savings have declined. As of 2015, 22.5% of black students and 15.5% of Hispanic students had completed four years of college. This compares to 36.2% of white students, an inequality, but not a horrible one. By 2013, the average salary of a black college grad was somewhat over $1000/week, somewhat less than the average for whites, but enviable compared to the world as whole. The problem is that black workers manage to save very little compared to other ethnic groups, and compared to previous savings rates as shown by the graphic below. By 2013, the net worth of the median black family (savings, plus paid-off part of home and car) was a mere $11,000 (Pew Research Data, below), down from $19,200 six years earlier, and much lower than the net worth of white families (also down since 2007). Liquid savings among blacks are much lower — near zero — and this is just the mean. Half of all black families are doing worse.
Net worth disparity 2007 – 2011. Black folks are doing poorly and it’s getting worse.
The combination of low savings and low net worth puts black folks at a distinct disadvantage to their condition six years earlier. Without savings, it is near-impossible to weather the loss of a job, or even to fix a car or pay a ticket, Surviving through a disease is basically a one-way ticket to the welfare office. Six years ago, when people saved more and prices were lower, problems like these were major annoyances. Now, a job loss or a major repair is a family disaster.
The growth of check-cashing services in black neighborhoods is a symptom, I suspect, of the lack of liquidity. A person without savings will not have a checking account. As such, he or she will not have a credit card or check cashing privileges. The only way to cash a check will be via a for-fee service, and these tend to come at a steep cost (2-5%). People with savings accounts can cash checks essentially for free, and can usually borrow money by way of a credit card. People without savings can’t get approved. Black people and poor whites tend to use debit cards instead. They look and work like credit cards, but they incur fees upon use, and do not provide instant loans. When black folks and poor whites need quick cash, their options are the loan-shark or the pawn shop: high-cost options that take a giant toll on the family.
As mentioned above, black individuals and families have lower incomes than whites at all education levels. While racism, no-doubt plays a role, as best I can tell, the largest single cause seems to be family stability. Employed, college-educated blacks earn, on average, 95% as much as employed, college-educated whites — not great, but not bad. The real problem with black income is that black unemployment rates are higher, black education rates are lower, and single-parent families are significantly more common among blacks than among whites and Orientals. Roughly 40% of black families are single-mother, or mother+grandparent households compared to “only” 26% in the population generally. In both populations, the number of single parent households have increased dramatically in the last few years, a result I suspect of the government’s desire to help. The government gives more aid to a split-up couple than to one that stays together, but the aid brings with it long-term damage to net worth. A family with one parent will naturally have a lower-income and savings rate than a family with two. The lack of stability and savings that comes from having a single parent family, I suspect, has contributed to crime, births out-of-wedlock, and the tendency of blacks to drop out of college.
Black families don’t benefit much from college –in part a result of course choices, in part the result of borrowing. (Forbes, 2015).
One finds that do-gooders in the white communities want to eliminate check cashing businesses and pawn shops in a misguided desire to help the low-income neighborhoods, but the success of these companies tell me that they are needed. Though check services and pawn brokers take a nasty bite, urban life would be much worse without them, I suspect.
Another so-called solution of the do-gooders, is to tax savings and transfer the wealth to the poor. This form of wealth redistribution has been a cornerstone of the Democratic party for the last century. The idea of the tax is that it will transfer “idle wealth” from rich savers to poor folks who will spend it immediately. The problem is that great swathes of the nation don’t save at all currently; net worth is down all across the US — among white and black families both. Taxing savings will almost-certainly reduce the savings rate even further. Besides, savings are the stuff of self-determination and dreams — far more than spending, it is savings that allows a person to start a new business. One does not provide for the dreams of one group by taking them from another — particularly another group chosen to be immediate spenders. That is a route to community disaster, is seen by looking at Detroit.
As it is, many poor, inner city children do not see a path out via education. Detroit school attendance hovers around 50%, and business startups are lacking. As best inner city people can tell, the only ways out are sports, music, prostitution, crime, and the church. With higher savings rates and higher family stability, folks could start businesses, and/or take advantage of job opportunities that come along. People seem to think that wealth redistribution should help, but it just seems to reduce savings and family stability. Every effort to increase wealth redistribution only seems to make things worse in Detroit. It sometimes seems that the only businesses in Detroit are check cashing, pawn brokers, churches, hair-salons, fast food, and medical marijuana — businesses that require little investment, but provide little community return too. Detroit has lost its manufacturing center, and now has more medical marijuana providers than groceries — a sad state of affairs.
The Check cashing services of south-eastern MI are concentrated in poor black and white neighborhoods.
In 2016, both presidential candidates touted major infrastructure projects, highways and the like, to help the inner city poor. In principle this can help, but I have my doubts. One basis of doubt: inner city youth do not have the training to build roads and bridges — they have barely the training to work at McDonald’s. For another thing, if the project itself isn’t needed, it becomes another form of income redistribution. There tends to be a lack of pride in doing it well, and the benefits are basically nothing. A major war could provide jobs, of course, but most sane people prefer peace. Trump has made the case for tariffs (closing off free trade) as a way to rebuild the industrial center of cities like Detroit. It’s an approach that I think has merit. He’s also suggested closing the border to low-wage, Mexican workers, and recently signed a bill that raised the minimum wage for foreign workers. This is expected to raise the price of California lettuce and NY hotel stays, but is likely to increase employment among low-skill Americans — blacks and poor whites. Small steps, I think, to solving a serious national problem.
A few months ago, I wrote a rather depressing essay based on Nobel Laureate, Kenneth Arrow’s work, and the paradox of de Condorcet. It is mathematically shown that you can not make a fair election, even if you wanted to, and no one in power wants to. The game is rigged.
To make up for that insight, I’d like to show from the work of John Forbes Nash (A Beautiful Mind) that you, personally, can win, basically all the time, if you can get someone, anyone to coöperate by trade. Let’s begin with an example in Nash’s first major paper, “The Bargaining Problem,” the one Nash is working on in the movie— read the whole paper here. Consider two people, each with a few durable good items. Person A has a bat, a ball, a book, a whip, and a box. Person B has a pen, a toy, a knife, and a hat. Since each item is worth a different amount (has a different utility) to the owner and to the other person, there are almost always sets of trades that benefit both. In our world, where there are many people and everyone has many durable items, it is inconceivable that there are not many trades a person can make to benefit him/her while benefiting the trade partner.
Figure 3, from Nash’s, “The bargaining problem.” U1 and U2 are the utilities of the items to the two people, and O is the current state. You can improve by barter so long as your current state is not on the boundary. The parallel lines are places one could reach if money trades as well.
Good trades are even more likely when money is involved or non-durables. A person may trade his or her time for money, that is work, and any half-normal person will have enough skill to be of some value to someone. If one trades some money for durables, particularly tools, one can become rich (slowly). If one trades this work for items to make them happy (food, entertainment) they can become happier. There are just two key skills: knowing what something is worth to you, and being willing to trade. It’s not that easy for most folks to figure out what their old sofa means to them, but it’s gotten easier with garage sales and eBay.
Let us now move to the problem of elections, e.g. in this year 2016. There are few people who find the person of their dreams running for president this year. The system has fundamental flaws, and has delivered two thoroughly disliked individuals. But you can vote for a generally positive result by splitting your ticket. American society generally elects a mix of Democrats and Republicans. This mix either delivers the outcome we want, or we vote out some of the bums. Americans are generally happy with the result.
A Stamp act stamp,. Used to tax every transaction, the British made it impossible for ordinary people to benefit by small trades.
The mix does not have to involve different people, it can involve different periods of time. One can elect a Democrat president this year, and an Republican four years later. Or take the problem of time management for college students. If a student had to make a one time choice, they’d discover that you can’t have good grades, good friends, and sleep. Instead, most college students figure out you can have everything if you do one or two of these now, and switch when you get bored. And this may be the most important thing they learn.
This is my solution to Israel’s classic identity dilemma. David Ben-Gurion famously noted that Israel had the following three choices: they could be a nation of Jews living in the land of Israel, but not democratic. They could be a democratic nation in the land of Israel, but not Jewish; or they could be Jewish and democratic, but not (for the most part) in Israel. This sounds horrible until you realize that Israel can elect politicians to deliver different pairs of the options, and can have different cities that cater to thee options too. Because Jerusalem does not have to look like Tel Aviv, Israel can achieve a balance that’s better than any pure solution.
Everything wears out. This can be a comforting or a depressing thought, but it’s a truth. No old mistake, however egregious, lasts forever, and no bold advance avoids decay. At best, last year’s advance will pay for itself with interest, will wear out gracefully, and will be recalled fondly by aficionados after it’s replaced by something better. Water wheels, and early steamships are examples of this type of bold advance. Unfortunately, it is often the case that last years innovation turns out to be no advance at all: a technological dead end that never pays for itself, and becomes a dangerous, rotting eyesore or worse, a laughing-stock blot or a blot on the ecology. Our first two generations of advanced windmill farms seem to match this description; perhaps the next generation will be better, but here are some thoughts on lessons learned from the existing fields of rotting windmills.
The ancient design windmills of Don Quixote’s Spain (1300?) were boons. Farmers used them to grind grain or cut wood, and to to pump drinking water. Holland used similar early windmills to drain their land. So several American presidents came to believe advanced design windmills would be similar boons if used for continuous electric power generation. It didn’t work, and many of the problems could have been seen at the start. While the farmer didn’t care when his water was pumped, or when his wood is cut. When you’re generating electricity, there is a need to match the power demand exactly. Whenever the customer turns on the switch, electricity is expected to flow at the appropriate amount of Wattage; at other times any power generated is a waste or a nuisance. But electric generator-windmills do not produce power on demand, they produce power when the wind blows. The mismatch of wind and electric demand has bedeviled windmill reliability and economic return. It will likely continue to do so until we find a good way to store electric power cheaply. Until then windmills will not be able to produce electricity at competitive prices to compete with cheap coal and nuclear power.
There is also the problem of repair. The old windmills of Holland still turn a century later because they were relatively robust, and relatively easy to maintain. The modern windmills of the US stand much taller and move much faster. They are often hit, and damaged by lightning strikes, and their fast-turning gears tend to wear out fast, Once damaged, modern windmills are not readily fix, They are made of advanced fiberglass materials spun on special molds. Worse yet, they are constructed in mountainous, remote locations. Such blades can not be replaces by amateurs, and even the gears are not readily accessed to repair. More than half of the great power-windmills built in the last 35 years have worn out and are unlikely to ever get repair. Driving past, you see fields of them sitting idle; the ones still turning look like they will wear out soon. The companies that made and installed these behemoth are mostly out of the business, so there is no-one there to take them down even if there were an economic incentive to do so. Even where a company is found to fix the old windmills, no one would as there is not sufficient economic return — the electricity is worth less than the repair.
Komoa Wind Farm in Kona, Hawaii, June 2010; A field of modern design wind-turbines already ruined by wear, wind, and lightning. — Friends of Grand Ronde Valley.
A single rusting windmill would be bad enough, but modern wind turbines were put up as wind farms with nominal power production targeted to match the output of small coal-fired generators. These wind farms require a lot of area, covering many square miles along some of the most beautiful mountain ranges and ridges — places chosen because the wind was strong
Putting up these massive farms of windmills lead to a situation where the government had pay for construction of the project, and often where the government provided the land. This, generous spending gives the taxpayer the risk, and often a political gain — generally to a contributor. But there is very little political gain in paying for the repair or removal of the windmills. And since the electricity value is less than the repair cost, the owners (friends of the politician) generally leave the broken hulks to sit and rot. Politicians don’t like to pay to fix their past mistakes as it undermines their next boondoggle, suggesting it will someday rust apart without ever paying for itself.
So what can be done. I wish I could suggest less arrogance and political corruption, but I see no way to achieve that, as the poet wrote about Ozymandias (Ramses II) and his disastrous building projects, the leader inevitably believes: “I am Ozymandias, king of kings; look on my works ye mighty and despair.” So I’ll propose some other, less ambitious ideas. For one, smaller demonstration projects closer to the customer. First see if a single windmill pays for itself, and only then build a second. Also, electricity storage is absolutely key. I think it is worthwhile to store excess wind power as hydrogen (hydrogen storage is far cheaper than batteries), and the thermodynamics are not bad
For no obvious reason, many Republicans and some (few) Democrats are fans of the flat tax. That is a fixed percentage tax on every dollar earned with no deductions, or very few. They see the flat tax as better, or more fair, than the progressive, graduated tax found in the US and most industrial countries. While most Republicans don’t like high taxes, as in Sweden, France, or in the UK, the flat-taxers want a single tax rate: a constant percentage for all. A common version is what Ben Carson described earlier this month, “if you earn ten million dollars your tax will be one million; if you earn ten dollars, your tax will be one dollar.” Herman Caine (R) proposed something similar eight years ago, and (surprisingly) so did Jerry Brown (D).
Ben Carson proposes a 10% flat tax.
As it happens, of the 230 nations on the planet, several already have a flat income tax, and none of them are industrial juggernauts. I will list the larger of these countries in order their tax rate: Mongolia and Kazakhstan, 10% flat tax and hardly any services; Russia and Bolivia, 13% flat tax: moribund, raw-material-based, police-states; Romania and Hungary 16%; Lithuania and Georgia 20%; Zambia 22%; Switzerland, 35% when you include the Cantonal and municipal flat rates, and (topping the list) Greenland at 45%. Not one of these is a productive, industrial powerhouse, like the US, and there is no indication that this will change any time soon.
I suspect that the flat tax enters the minds of conservatives from the Bible, from the 10% of grain that was given to the Levites (Numb. 18:24), and the second 10% eaten of pilgrimage festivals or given to the poor (Deut. 14:22-24). If that’s the source, let me suggest a better modern version is to give out cans of food, or to support ones church. But as a model for government finance, I’d suggest it’s best to leave more in the pockets of the poor, and tax more from the rich. Even in Biblical times, the government (king) levied a substantial tax above the 10%s described above.
A measure of tax rate is the percentage of the total GDP that goes to taxes. As things go, our tax rate isn’t particularly high.
A flat tax does not necessarily imply a low tax, either. Greenland’s flat 45% rate is among the highest in the world, and Israel had a 50% flat tax until fairly recently. It’s also worth noting that personal income isn’t the only thing one can tax. Several countries combine moderate personal income rates with high corporate rates (Venezuela, Zambia, Argentina), or add on a high sales tax, or a transaction tax. Herman Caine’s 9-9-9 tax plan included a 9% transaction tax and a 9% federal sales tax that would have gone on top of whatever the state tax would have been. The revenue collected by the 9-9-9 plan would have been no less than we had, but would be, he claimed, simpler. Cain’s flat tax wasn’t even really flat either, as there was an exclusion, an income level below which you were taxed 0%. That is, he was really proposing a two tier system, with a 0% rate at the first tier. Rand Paul seems to favor something similar today.
The two advantages of a flat tax are simplicity, and that it reins in the tendency to tax the rich too much, a tendency found with many liberal alternatives. The maximum tax rate was 95% in England under Attlee. Their 95% tax-rate appears in the Beetles’s song, Mr Taxman: “…There’s one for you, nineteen for me; ‘Cause I’m the Taxman.” High rates like this caused the destruction of many UK businesses, and caused The Beetles’s to leave and reincorporate in the Cayman Islands. Bernie Sanders recently proposed a top rate that was nearly as high, 90%, and praised Denmark (60% maximum rate) for its high social services. Sorry to say, Denmark seems to have concluded that their 60% maximum was excessive, and earlier this year reduced their maximum to 47.794%. This is below the maximum US rate if you include New York state and city income taxes. History suggests that if you tax the rich at rates like this, they leave or do other socially unacceptable things, like go black-market. On the other hand, if you tax too little, there is no money for education or basic social services, e.g. for the desperately poor. At one point, I proposed the following version of graduated to negative scheme that manages to provide a floor, a non-excessive top rate, and manages to encourage work at every income level (I’m rather proud of it). And there are other key issues necessary for success, like respect for law, and not having excessive minimum wages or other excess regulations.
Whatever the tax structure is, there is probably an optimal average rate and an optimal size for the government sector. I suspect ours is near optimal, but have no real reason to think so (probably just nativism). I’ve found that comparing the US tax rates to other countries’ is very difficult, too. Most countries have a substantial Value Added Tax (VAT), that is a tax applied to all purchases including labor, but we do not. Some countries have import taxes (Tariffs, I’m in favor of them), while we have hardly any. And many countries tax corporate profits (and sales) at rates above 60% (France taxes them at 66.6%). To make any sort-of comparison, I’ve divided the total tax income of several countries by the country’s GDP (I got my data here). This percent is shown in the chart above. The US looks pretty average, though a little on the low side for an industrial nation: just where I like to see it.
Robert E. Buxbaum, November 29, 2015. I imagine myself to be a centrist, since all of my opinions make sense to me. When I change my mind on something, I stay at the center, but the center moves. If this subject interests you, Alvin Rabushka seems to have dedicated his life to following the flat tax.
