29 April 2022

Not Every College Program Is Worth It, And College Isn't Right For Every Student

Defaults on student loans, which are an empirical measure of inability to pay these loans which are almost impossible to discharge in bankruptcy, are highly concentrated among students who have dropped out, who weren't able to secure professional certification in their chosen fields, who attended "for profit" institutions of higher education, or attended other low quality (often private and religious) institutions of higher education. 

Also, some programs of study produce greater economic returns on investment than others.

Graduates of reputable higher educational institutions, especially those with a track record of having economic value, who manage to secure the relevant professional certifications, in contrast, have very low default rates even when the student loan debts that they owe are substantial.

An op-ed column lays out some of the relevant facts:

Before the federal government forgives student loan debt, it would be good to understand what makes the debt so onerous. The problem isn’t overwhelming debt — it’s underpowered education.

Postgraduate borrowers aren’t earning enough money to repay their loans because whatever they studied didn’t give them the skills to get a sufficiently well-paying job.

Think about it: Even a big debt is manageable if you incur it to get, say, a medical degree. Conversely, even a small debt is unaffordable if you major in a field with limited career prospects or low pay or, worse, you drop out with nothing to show for your efforts. The high price of tuition simply compounds the problem. . . .

According to the latest data from the Department of Education’s National Center for Education Statistics, only 26 percent of students who enrolled in private, for-profit institutions in 2013 managed to graduate within six years. Other schools’ six-year graduation rates weren’t great, either: 62 percent for public institutions and 68 percent for private nonprofits.

A report last year by Third Way, a center-left think tank, found more than 500 schools where the average low-income student who enrolls earns less than an average high school graduate, even 10 years after enrolling. “It’s unlikely that low-income students who attend these institutions will ever be able to recoup their educational investment,” the study said.

The Third Way report linked above used the following metric that is then broken down in the charts below, which tend to show that a 15 or 20 years to recoup net cost threshold would be quite reasonable.

There is a piece missing from this analysis, however, which is that many of the institutions with high default rates irresponsibly admit and accept tuition from large numbers of students who lack sufficient academic preparation and aptitude as demonstrated by secondary school curriculum, grades, test scores, and references, for example, to have a reasonable chance of graduating from the program and succeeding the the careers that these students are entering those programs to pursue.

While there is a positive credential effect associated with many degrees and majors, it is also the case that detailed measures of learning and value added are consistently lowest, on average, for the students admitted with marginal academic readiness for college.

Most often, these ill-prepared students incur substantial tuition, fees and sometimes room and board costs, to attend for a while, during which they are also forgoing opportunities to pursue work or apprenticeships that make more sense for them, much of it financed with student loan debt that can't be discharged in bankruptcy, and then they predictably fail and drop out. The students who do drop out in these circumstances often gain little or no educational benefit from the experience during which they were in over their heads. And, their failure does not build character, at least relative to successes that they could have had in a more suitable post-high school path.

One can argue that everyone ought to be able to have their chance, but one problem with that argument is that students who are ill-equipped to succeed in a particular high educational or post-high school program are often also in a poor position to accurate gauge their chances of success in doing so.

Many post-high school educational programs eligible for student loan financing so consistently admit students who are ill-prepared and fail, and offer such poor quality instruction, that the institutions should not continue to receive any public support or recognition and are basically fraudulent schemes.

Other programs provide outcomes comparable to public community colleges, but not significantly better, and with a much higher price tag for students, for the federal government that makes good on defaulted student loans, and at a much higher cost per successful graduating student.

Schools that are providing poor economic returns to their students are overwhelmingly admitting large numbers of low income students eligible for Pell grants who aren't academically prepared. More affluent students have social networks and resources sufficient to let them know that the problem institutions and/or programs are basically scams.

At other times, the problem is not an entire post-high school education program (I continue to use the term because many of these programs are not traditional academic degree programs), but just a few programs within that institution.

Advocates of the value of a generalize liberal education can argue that higher education is about more than money. But that ignores the fact that the most egregious offenders are predominantly offering pre-professional programs like the Marinello Schools of Beauty, used as a poster child for this problem in the article quoted above. Student loan defaults aren't coming mostly from liberal arts college program graduates who majored in classics or English literature.

This isn't to say that the non-profit and public higher education sectors are blameless. For the most part, they offer reasonably legitimate educational experiences and charge tuition that is less unreasonable relative to the quality of the programs that they offer. 

But, they too are frequently guilty of admitting academically unprepared students whom they set up to fail and don't provide the extra academic support to that students on the margin need to have a fighting chance, nor do they adequately warn marginal students that they are at heightened risk for failure.

Admittedly, predicting academic success is not an exact science. There are plenty of admitted students who have a very reasonable chance of success who nonetheless don't have the 90%+ odds of graduating and receiving any necessary professional certifications associated with their degrees that selective institutions of higher education do.

But it is also true, particularly at "open admissions" institutions and non-flagship public colleges and universities with lower retention rates, that the fact that often, probably a majority of the time, the fact that a particular student dropped out without graduating was eminently predictable before the first day of class. And, when that happens, the public that helped finance that predictably failed effort to pursue higher education is burned and the failed students, often burdened with student loans that are onerous for them, are frequently not better off compared to their other alternatives either.

More often than not, it is correlation and not causation, it is also true that students who aren't academically ready are also socio-economically less well off, and their predictable failures also burden their families much more severely than an upper middle class student who washes out in college.

This isn't to say that we shouldn't invest as a society in the betterment of young adults who aren't academically ready for college at the age of eighteen. But the funds our society invests in these young people could be spent on investments that put these young adults on paths to success rather than failure, and there are also plenty of people who, while they aren't ready for further education at age eighteen, have matured and are ready for further education and training five or ten or twenty years later.

We can also give those young people a boost by refusing to require educational credentials for employment that aren't actually necessary or beneficial for the job.

There are schools at providing great value to lower income students. The City University of New York, and the California State University System are standouts when it comes to four year degrees. So are a variety of public two year degree programs. No private or "for profit" colleges make the top ten cut in either four year degree or two year degree programs, and no private non-profits make the cut in certificate programs, although three "for profit" programs do:

* Teterboro School of Aeronautics in New Jersey, 
* Marian Health Careers Center in Los Angeles, and
* Alliant International University in San Diego.

Forty-six programs in Colorado were evaluated. The key portions of those evaluations and related analysis are below the fold. 

Quick Hits

* Focused, quality, STEM education, even if fairly brief, adds lots of economic value, according to a study of graduates of non-degree "tech boot camps" that basically taught coding to non-computer science majors (not all of whom had four year degrees):

Although graduates of 2U boot camps spent between one-quarter and one-third of what bachelor’s degree-holders typically spend on their programs, boot camp graduates reported earning as much or more money in the year after they graduated.

The median 2018 boot camp graduate without a bachelor’s degree reported earning nearly as much ($55,000) in the year immediately after their boot camp as the median computer science bachelor’s degree graduate ($56,421), and they earned roughly $10,000 more than non-computer science majors ($44,033).3

Boot camp graduates with a bachelor’s degree (which accounts for most of the surveyed graduates) earned even higher salaries — about $5,000 more — than their counterparts with less than a bachelor’s degree. Further, boot camp graduates with bachelor’s degrees are outearning U.S. workers of the same age with a bachelor’s degree.
* Fewer graduate degrees are being awarded in the humanities in the U.S.:
Master’s degrees in the humanities, of which 16,057 were awarded in 1988, rose to 32,584 in 2012, the year they peaked. In 2020, they fell to 26,566, the report said. The number of doctoral degrees awarded also rose and fell during that time. There were 3,110 doctoral degrees in the humanities in 1998. The number rose steadily to 6,010 in 2015 but fell to 5,483 in 2020.

* Out of pocket health care spending is up, especially in the U.K.:

In 1990, out-of-pocket spending by Britons on medical expenses was equivalent to 1 per cent of GDP, while across the Atlantic, uninsured Americans forked out more than twice as much, at 2.2 per cent. Thirty years on, that gap has all but disappeared. Americans’ non-reimbursable spending now stands at 1.9 per cent, and Britons’ has doubled to 1.8 per cent. . . .

Between 2010 and 2020, the portion of UK spending that went on hospital treatments increased by 60 per cent overall, but more than doubled among the lowest-earning fifth of the population. The poorest now spend as much on private medical care as the richest, in relative terms. One in 14 of Britain’s poorest households now incurs “catastrophic healthcare costs” in a typical year — where costs exceed 40 per cent of the capacity to pay. This is up from one in 30 a decade ago.
* From the Economist (paywalled):
So far, the invasion of Ukraine has been a disaster for Russia’s armed forces. About 15,000 troops have been killed in two months of fighting, according to Britain’s government. At least 1,600 armoured vehicles have been destroyed, along with dozens of aircraft and the flagship of the Black Sea fleet. The assault on the capital, Kyiv, was a chaotic failure.
* USNI news reports that:
A year ago, the [U.S. Navy] plan was to build two types of USVs [unmanned surface vessels]: a large lightly manned or autonomous that would serve as a missile magazine for the surface fleet and a medium USV that would act as a host for sensors and other payloads smaller than vertical launch cells.
After testing in the Middle East, it now seems that small drone aircraft deployed from a corvette sized, minimally manned arsenal ship can meet most of the sensor needs that medium USVs (think 23' long speedboat sized) were intended to meet. The vulnerability of forward USVs to anti-ship weapons, relative to the vulnerability of forward small drone aircraft is also a factor.

* Japan is fielding a new class of frigates:

Equipped with compact hulls, JS Mogami was built for about 46 billion yen ($352 million) under a contract awarded in October 2018, according to the JMSDF. As with the other ships of the class, the 3,900-tonne vessel will have a crew complement of about 90, a beam of 16.3 meters, and a hull draught of 9 m. . . .

Powered by a combined diesel and gas (CODAG) propulsion system featuring two MAN 12V28/33D STC diesel engines and one Rolls-Royce MT30 gas turbine, the ships are expected to be capable of attaining a top speed of at least 30 kt.

Armament on the frigates include a BAE Systems 5-inch (127 mm)/62-caliber naval gun in the foredeck of the ship, two missile canisters for a total of eight MHI Type 17 anti-ship missiles, and a Raytheon 11-cell SeaRAM close-in weapon system (CIWS) that can deploy RIM-116C Block 2 Rolling Airframe Missiles (RAMs).

The frigates will also be equipped with variable depth sonar and towed array sonar systems for anti-submarine warfare (ASW) operations.

Besides anti-air, anti-surface and ASW capabilities, the Mogami class has also been designed to undertake operations as a “mother ship” for an unmanned underwater vehicle (UUV) and an unmanned surface vehicle (USV), both of which will see the first installment on any Japanese frigate ever. This aims to enhance the UUV’s mine countermeasure (MCM) functions.

A spokesman at the Japanese Ministry of Defense’s Acquisition, Technology, and Logistics Agency (ATLA) has confirmed to The Diplomat that the Mogami class will be equipped with MHI’s OZZ-5 MCM autonomous underwater vehicle (AUV), used for MCM operations as a UUV. French defense and electronics group Thales has supplied MHI with its SAMDIS Synthetic Aperture Sonar (SAS) for integration on the OZZ-5 UUV. It is being supplied by MHI to the JMSDF as part of the defense cooperation agreement between Direction Générale de l’Armement (France’s defense procurement agency) and Japan’s ATLA. SAMDIS is a high-frequency, high-resolution SAS payload designed specifically to perform detection, classification, and localization of mine threats at sea. The system serves an automatic detection and classification function to alleviate operator workload in processing collected data. The OZZ-5 UUV, which measures 4 m long and 0.5 m wide with a displacement of 950 kg, is equipped with Japan’s NEC-made low-frequency SAS and France’s Thales-made high-frequency SAS combinedly, which is designed to ensure a robust MCM capability for the detection and classification of different mine threats in a range of environments. The UUV is powered by a lithium-ion rechargeable battery.

The frigate also has a manned military helicopter.

Japan's new frigate is half the size of the French designed Constellation-class frigate that the U.S. Navy has started to purchase, and has less than half as many crew (90 v. 200), at a price much less than the $1,260 million for the first ship and $1,060 million for subsequent ships that the U.S. Navy is paying. The Japanese frigate is about 15% faster than the Constellation, but probably has a shorter range.

The Constellation has two rigid hulled inflatable speed boats, a manned helicopter, and a helicopter drone, but no USVs or UUVs, and no anti-mine warfare capabilities.

The Constellation with carry 48 anti-ship missiles (some of which could be traded out for longer range anti-aircraft missiles or missiles to strike ground targets) v. 8 anti-ship missiles for the Japanese frigate, and 21 active defense RIM-116 missiles v. 11 for the Japanese frigate.

The Constellation will have a 2" naval gun v. a 5" naval gun on the Japanese frigate, in addition to smaller arms on both ships. It appears that neither ship will have torpedoes.

* Alcohol consumption is way down in France, mostly to reduced consumption of hard cider and table wine, which was only partially offset with increased consumption of champagne and higher quality wine. Consumption of spirits and beer is also down but only modestly.

The decline in French alcohol consumption is just astonishing. The average French person drinks less than a quarter as much wine today as they did in the 1960s. And look at that cidre decline.

* The Russians didn't have as much money in Switzerland as had been commonly suspected:
Two months into Vladimir Putin’s brutal war of aggression in Ukraine, however, what is remarkable is just how little Russian capital actually seems to be in the Alps. Neutral, inscrutable Switzerland was, perhaps more than any other country, presumed to be the treasure house of the Putin kleptocracy.

But despite Bern having mirrored all of the US and EU sanctions against Russian oligarchs — measures that apply to around 900 people globally — just $8bn of Russian assets in the country have so far been frozen.

Consider, by comparison, that the channel island of Jersey alone has frozen $7bn of assets linked to a single Russian tycoon, Roman Abramovich. 
It is unclear what the total amount of Russian assets seized will end up being, but the $15 billion of assets in these two examples that are part of a much bigger picture, and perhaps dozens of large yachts and private jets, surely adds up to a significant amount of wealth (at a minimum, on the same order of magnitude as Western military aid to Ukraine).

Also, direct seizures don't reflect the immense price that rich Russians are paying as a result of devaluation of their business assets and ruble denominated financial assets as a result of the Ukraine war.

* From Marginal Revolution: "the average Twitter employee generates $677k in revenue.”

* The Mormon Temple in Washington D.C. just completed a major renovation.

* The U.S. Supreme Court, in a 6-3 decision on conservative-liberal lines, has greatly reduced the damages that can be recovered from facilities receiving federal money by disallowing money damages for emotional harm caused by discrimination under the Rehabilitation Act of 1973 or the Affordable Care Act. This crabbed interpretation argues that discrimination lawsuits arising from federal funding are basically third-party beneficiary breach of contract lawsuits, rather than tort lawsuits.

28 April 2022

Unions and Meritocracy

I've frequently argued that an important result of widespread greater meritocracy in college admissions and business hiring (which really started to take hold in the late 1960s) has been to co-opt into management people who otherwise would have become union organizers. 

The New York Times in an article today entitled "The Revolt of the College-Educated Working Class: Since the Great Recession, the college-educated have taken more frontline jobs at companies like Starbucks and Amazon. Now they’re helping to unionize them.", which documents something similar happening now that has been critical to recent major gains by the union movement.

Selected Fakemarks

One common literary convention in a variety of fictional settings, but especially webcomics and anime, is to avoid depicting real trademarks, to avoid promoting real companies and to avoid any claim of trademark infringement (even though "nominal use" of this type would almost never actually be infringing). 

But trademarked products are pervasive in daily life, so any reasonably realistic work of fiction in a modern setting needs to reflect this reality. This is often done with what I call "fakemarks" that may echo a real world trademark or trade name or famous title of a fictional work, or may be entirely original, for products in the fictional world depicted. Some are wry satire, others are simply phonetically or visually similar, or tweak a semantic concept in the original.

I have collected a number of examples of them, which I present below.

27 April 2022

Federal Criminal Sentencing In 2021

The US Sentencing Commission has released its "Overview of Federal Criminal Cases, Fiscal Year 2021." According to the Commission's summary of the report: 
The United States Sentencing Commission received information on 57,377 federal criminal cases in which the offender was sentenced in fiscal year 2021. Among these cases, 57,287 involved an individual offender and 90 involved a corporation or other “organizational” offender [ed. about one in 637 sentenced criminal defendants]. The Commission also received information on 4,680 cases in which the court resentenced the offender or otherwise modified the sentence that had been previously imposed. . . . 

The 57,287 individual original cases reported to the Commission in fiscal year 2021 represent a decrease of 7,278 (11.3%) cases from fiscal year 2020, and the lowest number of cases since fiscal year 1999. The number of offenders sentenced in the federal courts reached a peak in fiscal year 2011 and the number of cases reported in fiscal year 2021 was 33.5 percent below that level. . . .

Cases involving drugs, immigration, firearms, and fraud, theft, or embezzlement accounted for 83.1% of all cases reported to the Commission.

Drug offenses overtook immigration offenses as the most common federal crime in fiscal year 2021, accounting for 31.3% of the total caseload. . . .
Methamphetamine remained the most prevalent drug type. The 8,494 methamphetamine cases accounted for 48.0 percent of all drug crimes. The proportion of methamphetamine cases has increased steadily since fiscal year 2017, when those cases accounted for 36.6 percent of all drug cases.

The number of fentanyl cases increased 45.2 percent from the year before and now constitute the fourth most numerous drug type. In contrast, the proportion of the drug caseload involving heroin and marijuana has steadily decreased over the last five years.

Via the Sentencing Law and Policy blog.

Big picture conclusions:

1. Federal criminal prosecutions declined about 11% due to the pandemic but have already declined from their peak in 2011 despite population growth of 6.8% in the U.S. from 2011 to 2021. The rate at which individuals are sentenced to federal crimes in the U.S. per 100,000 people declined 37.8% from 2011 to 2021. 

Other data not included in the report suggests that declining crime rates more generally was one of the main factors, even though the rate at which people are convicted of federal crimes (which make up a subject-matter selected and quite small share of the total number of criminal convictions in the U.S.) is not necessarily a function of the overall crime rate.

2. Prosecutions for firearm offenses and drug offenses in the federal courts are largely driven by long mandatory minimum sentences there that are not present in state courts. Most are open and shut cases proven with undeniable evidence of possession of drugs or of possession of a firearm by someone not permitted to do so, and are often referred to the federal government by local law enforcement. Very few of these cases have anything intrinsic to the offense that makes them obviously better suited to use of the federal criminal justice system than to the state criminal justice system.

3. Immigration offenses are one of the few categories of crimes for which the federal courts have exclusive jurisdiction so it isn't too surprising that these cases make up a big share of the federal criminal docket. Many of these offenses are low level misdemeanors that could have been handled as civil matters instead.

4. White collar, non-violent property crimes make up a big share of federal criminal cases. This is driven largely by expertise, interest, and the availability of resources to handle these cases. The conduct in question is almost always also a crime under state law. But often these cases are incident to and discovered in connection with federal regulatory laws like securities fraud, intellectual property infringement prohibitions, and consumer protection laws.

5.  The federal courts handle few serious violent crimes, and a lot of those involve cases in Indian Country (a legal term of art), or were committed on federal land. The relative lack of hardened violent "blue collar" criminals makes federal prisons more attractive than state prisons to criminal defendants.

6. It would not be difficult at all to dramatically reduce the federal criminal docket and the size of the federal prison system by shifting a large share of federal cases to the state courts and treating minor federal immigration offenses as civil matters, without doing significant harm to important criminal justice policies. As it is about 12.3% of people who are incarcerated are incarcerated for a criminal conviction were convicted of federal crimes (about one in eight) and only about 2% of criminal trials take place in federal court. Yet, those numbers could easily be reduced by more than 50% with a handful of statutory amendments.

The Ukraine War Considered After Nine Weeks

Tomorrow it will be nine weeks after the commencement of the Russian invasion of Ukraine. 

Where are we now?

Ukraine, remarkably, remains in control of much of its airspace. Its smaller Air Force was better trained than the Russian Air Force and has performed remarkably. The widespread availability of MANPADS (infantry carried anti-aircraft missiles) and some larger anti-aircraft missiles has helped.

Russian forces have retreated from Kyiv and much of northern Ukraine. Apart from possibly providing air bases for Russian aircraft and missile launchers, Belorussia is no longer being used as a staging area for Russian forces. This is, in part, due to Belorussian rail sabotage

The Russian military has experienced not insignificant losses in the form of military personnel casualties, armored vehicles and weapons systems, one major naval ship, and a modest number of helicopters and fixed wing aircraft. It has largely exhausted its supply of guided missiles. 

Ukrainian forces have made a small number of high impact strikes into Russian territory near the Ukrainian border to hit industrial and military facilities that support the Russian invaders.

Russia has committed well documented war crimes, indiscriminately targeting civilians with unguided artillery and rockets and with tank rounds, and engaging in mass rapes and executions. The civilian toll has been mostly in areas that are disproportionately ethnic and linguistically Russian. In the areas Russia has targeted in this post-2014 offensive, the local populations appear to be mostly pro-Ukrainian. Russia continues to aim strikes deeper into Ukraine, but seemingly randomly, like missiles that hit a residential area in Odessa and killed six civilians. 

This conflict has demonstrated the important priority of quickly locating and destroying enemy artillery which has been the characteristic means by which Russian forces have harmed Ukrainians.

Mud was Ukraine's friend, keeping Russian forces in conveys on roads. Light Ukrainian forces fired advanced anti-tank missiles at tanks and other heavy military vehicles in the convoys; while Russians failed to have the disciplined infantry support for their armor necessary to counter these attacks. Ukrainian forces particularly emphasized armor at the front of the line (to block vehicles behind it when immobilized), striking the small number of armored vehicle recovery vehicles (basically tow trucks for tanks) to prevent barriers from being cleared, and lightly protected logistics vehicles supplying food and fuel to Russian troops.

Most of the world has rallied around Ukraine, providing it an abundance of advanced weapons and parts and ammunition and supplies, but not troops. Russia's threats to use nuclear weapons after tolerating this proxy war structure, appears to have ebbed.

Russia has cut off natural gas supplies to Poland and Bulgaria, something that those countries lacked the political will to do themselves. This deprives Russia of its main leverage going forward agains Poland and Bulgaria since it has already "pulled the trigger" and significantly cuts its access to foreign currency for exports. It comes close to an act of war against Poland and Bulgaria pushing them further to the Ukrainian side. It provides Germany and other Western European nations with a sneak preview of how to respond to losing natural gas supplies.

The global economic boycott, partially due to formal governmental sanctions and partially due to private companies withdrawing from operations in Russia, has a continuing and mounting negative effect on the Russian economy. And, even countries like India and China that are formally non-aligned or have been mild Russian supporters, are not sticking their necks out to do anything meaningful to support Russia or continue vigorous trade with it. Russia doesn't have an ability to import new advanced military supplies and its defense industrial capacity is only mediocre. Russia's best and brightest are emigrating, possibly for good. This will continue to extract a toll on Russia's economy month by month, which means that time is not on Russia's side in this conflict, and much of the harm done to the Russian economy will not easily be remedied when the war is over.

At least in terms of appearances, seizures of yachts, private aircraft, sports team ownerships, and financial assets of Russian oligarchs have been a win for the West, providing a propaganda example of a strike back at Russia while not provoking serious Russian countermeasures. It is a serious blow to an entire elite Russian social class that will no doubt leave even those oligarchs feeling little personal impact from the sanctions feeling less wealthy and less secure.

The conflict has undermined pro-Russian politicians and conservative activists in the U.S. (including many pro-Trump figures) and on the right in much of Europe, although not decisively enough to oust incumbent far right politicians and parties in either place.

Ordinary Russians are now mostly cut off from news and media from the outside world, and the Russian propaganda machine is working hard to pitch an absurd story of the conflict, but it can't be as absolute as it used to be. There are plenty of leaks of the Western side of the story coming through.

Satellites, civilian and military alike, along with electronic surveillance and Internet based tools and the media, have made this a war in which there are no big secrets. Western intelligence sources have been sharing their collected information with Ukraine and with the general public, no doubt selectively, but in fairly credible ways. There has always been a "fog of war", but this time it has been a thinner one.

The sneak preview that this war has provided of what military equipment and tactics work and don't work will help the rest of the world readjust their forces for the next war at minimal costs to them.

A war of attrition that is starting to develop in Eastern and Southeastern Ukraine is bad for civilians there, bad for Ukrainian military forces, and depletes Russian military resources which it has a harder time replenishing despite being a larger country. But a war of attrition benefits the rest of Europe by diminishing the capacity of the Russian military in personnel, equipment, and morale, while European forces can reposition their forces optimally and otherwise prepare for any plausible Russian attack.

But for the threat of Russian nuclear weapons, Western countries would almost surely have intervened already with their conventional military forces rather than just supplying military gear to Ukraine. They have the collective military capacity to rout Russian forces in and near Ukraine swiftly. The Russian Black Sea fleet could be obliterated in a long weekend by Western anti-ship missiles and aircraft.

Historically, the number and importance of the allies of each side is the most important factor in determining who wins wars. Ukraine clearly has the advantage here. Russia has only a handful of insignificant firm allies (like Syria and some Central Asian former Soviet Republics) and a few powerful but neutral states supporting it. Ukraine has almost all of Europe and North America, and the bulk of the rest of the world backing it and almost no countries decisively giving it the cold shoulder in a pro-Russian fashion.

A best case scenario for Russia looks like coming away with Putin and his former United Russia party still in power, control of slightly more territory in Eastern Ukraine than it secured in 2014 with slightly more legitimacy and international recognition, a greatly diminished reputation for military prowess, and an economy permanently hampered by international disinvestment and a long run European disengagement from natural gas and oil that it hastened. 

It isn't yet clear what a worst case scenario would look like. Military capability concessions, turning over war criminals for trial, removing Putin from power, and reparations would be further downsides with historical precedents.

26 April 2022

Barriers To Suing Bad Cops

The law is full of unreasonable traps for the unwary trying to seek relief for harm they suffer from misconduct at the hands of law enforcement.
West Virginia used-car dealers file motion to suppress evidence obtained during search, and four years later a court agrees that the state trooper who applied for the warrant omitted important facts and made misleading statements and dismisses the criminal charges (failing to disclose to customers that their cars had been totaled before being refurbished) with prejudice. 
Fourth Circuit: But it's too late for them to sue the trooper over the unconstitutional search. They should have sued while the criminal case was still pending.
From here.

Choice of Law Can Be Tricky

Many people aren't aware of this fact, but at least in civil cases, courts don't always apply the law of the place they are located, even when they have jurisdiction over a case and the parties to the case. 

Sometimes, the law of the place where the court is located regarding a topic called "choice of law" directs a court to apply the law of another jurisdiction. And, when that happens, the analysis is tricky and the outcome of the choice of law decision is often hard to predict.
Former California Congressman Devin Nunes sues Georgia-headquartered, Delaware-incorporated CNN in Virginia for allegedly defamatory claims made in New York about Nunes' conduct in Austria. 
The case is transferred to New York, but still governed by Virginia choice of law, and the New York court determines that, under Virginia law, California law governs the claims. The California Congressman objects that Virginia law would have applied New York law. 
Second Circuit: Virginia law would have applied California law. Dissent: Virginia law would have applied New York law. Or maybe D.C. law.
From here.

Firearms Are The Leading Cause Of Death In Children

According to the New England Journal of Medicine using CDC data, in the U.S., in last two decades, firearms related deaths in children are up significantly, while car accident related deaths in children are way down.

25 April 2022

Big Business Needs Strong Governments Committed To The Rule Of Law

One of the important reasons that the community of large, multinational business enterprises has reacted so strong to the Russian invasion of Ukraine by disinvesting in Russia and Belarus, and by ending trade with those states, is that big businesses need a predictable commitment to the rule of law to function. 

Russia's unprovoked massive invasion graphically demonstrated an utter disregard for rule of law and that is a deal breaker for a large corporation.

On the other hand, this paper doesn't engage with the fact that economic development is typically highly localized, even within a country, which suggests that the importance of geographical reach may be overstated.
This article argues that the rise of the modern state was a necessary condition for the rise of the business corporation. A typical business corporation pools together a large number of strangers to share ownership of residual claims in a single enterprise with guarantees of asset partitioning. We show that this arrangement requires the support of a powerful state with the geographical reach, coercive force, administrative power, and legal capacity necessary to enforce the law uniformly among the corporation’s various owners. Other historical forms of rule enforcement—customary law or commercial networks like the Law Merchant—are theoretically able to support many forms of property rights and contractual relations, but not the business corporation. Strangers cannot cooperate on the scale and legal complexity of a typical corporation without a functionally modern state and legal apparatus to enforce the terms of their bargain. In contrast, social acquaintances operating within a closely-knit community could, in theory, enforce corporate charters without state assistance, but will generally not want to do so due to the institutional costs of asset partitioning in such communities.

We show that this hypothesis is consistent with the experiences of six historical societies: late Imperial China, the 19th century Ottoman Empire, the early United States, early modern England, the late medieval Italian city states, and ancient Rome. We focus especially on the experience of late Imperial China, which adopted a modern corporation statute in response to societal demand, but failed to see much growth in the use of the corporate form until the state developed the capacity and institutions necessary to uniformly enforce the new law. 
Our thesis complicates existing historical accounts of the rise of the corporation, which tend to emphasize the importance of economic factors over political and legal factors and view the state as a source of expropriation and threat rather than support. Our thesis has extensive implications for the way we understand corporations, private law, states, and the nature of modernity.
Taisu Zhang and John Morley, "The Modern State and the Rise of the Business Corporation" SSRN Yale Law Journal, Forthcoming (February 26, 2022).

An Interesting Way Of Expressing Simultaneous Dialog

I'm always on the lookout for innovative ways to communicate things or literary devices that pop up in popular culture. This way of expressing simultaneous dialog in a speech bubble caught me eye today.

 From Rooftops and Roommates (Episode 94).

21 April 2022

Honest Wealth And Incentives

Two points, which aren't tightly related: Honest wealth, and incentives related to great wealth.

Honest Wealth

One of the criticism of great wealth is that it is "dishonest", in the sense that it is secured through criminal or tortious conduct, or that, more generally, it is obtained by exploiting the people from whom it was secured, or is made possible only through externalities imposed involuntarily upon others, or through consent to transactions that isn't fully voluntary.

The bumper sticker version is that "behind every great fortune is a great crime."

In contrast, "honest wealth" is wealth acquired in transactions in which the person who receives income as a result of a transaction creates something of value (net of externalities in the transaction, and with these externalities properly compensated), and receives only part of the wealth created in the transaction, resulting in a win-win which is agreed to in a fully voluntary manner.

Many critics of wealth inequality overestimate the extent to which great health is dishonest wealth. I certainly don't dispute that great wealth is sometimes mostly "dishonest" by this standard, and that the very wealthy often obtain at least some of their wealth dishonestly. And dishonest wealth is economically important. 

Climate change is mostly due to the externalities imposed upon the rest of the world by just a hundred companies (in all of economic history) which have mostly benefitted, collective, perhaps a hundred thousand families.

Most of the great wealth in the American South is attributable to a significant extent to two centuries of slavery.

But, far more of the wealth in 21st century America is honest wealth than its critics think.

A corollary of the notion of wealth acquired honestly is wealth used honestly, as opposed to use it for license to act wrongfully, or in order to corrupt the system.

But, the problems caused by, and the solutions for responding to, "dishonest wealth" (basically various forms of business regulation and anti-corruption measures and sliding scale punishments for wrongdoing) are different from those that interest me today, which are the problems intrinsic in even honest wealth used honestly.


Completely setting aside the issues associated with dishonest wealth and dishonest uses of wealth, however, even great "honest wealth" is a problematic barrier to developing a more affluent and productive society, related to the incentives that it creates.

The 20th century included an 82 year long experiment in the Soviet Union, countries in its sphere of influence, China, and countries in its influence, with Soviet-style and Maoist-style communism, that was also attempted in many countries in the developing and undeveloped world. The Soviet Union, which was the first country to usher in Communism at a national scale, started doing so in 1917 and was dissolved in a collapse of that system, that even its top leader recognized, in 1989. 

China adopted Maoist Communism starting around 1945, and has never formally disavowed it. But China and other nations in its sphere of influence in Asia started adopting reforms sometime after the Cultural Revolution in the 1970s (after only a single generation) that adopted market-like and private property accepting reforms of Maoist Communism starting in the 1980s. China hasn't made Western capitalist style reforms of its economy in a manner that is doctrinally pure or particularly faithful to Western legal and economic mixed economy models. Its property rights are less absolute, for example. But its economy is certainly, in substance, more capitalist than communist now. 

Also, even in the respects that China's political economy differs from Western style mixed economies, those differences, while they often have antecedents in pre-Western Chinese ideas about law, about how individuals interact in large organizations, and about the proper role of the government in society, don't have a particularly egalitarian, Marxist flavor seeking to vindicate the well being of the ordinary person at the bottom of the economic pyramid.

There are a few countries outside the Soviet and Chinese spheres of influence that are still trying to make Communism work on an ideologically Marxist influenced basis, most notably, Cuba (which is functioning quite well) and Venezuela (which is in an economic shambles of near total collapse, aggravated by international sanctions and international business disinvestment in response to its policies). 

But, it is fair to say that for all practical intents and purposes, Communism is dead even in countries with one party or dictatorial rule like North Korea that initially put those regimes in place based upon a Communist ideology. The remaining one party and totalitarian states of the world that were originally Communist ideological projects are now just plain old authoritarian regimes, not that different in how they operate and ideology from pre-modern monarchies.

In the end, Communism, as applied in the real world by many countries sincerely trying to make it work, failed. To be fair, there were alternatives of anarchy and a complete lack of organized economic development that were worse still. Even at its worst in places like Albania, Communism was better for the average person than Somalia-style clan warlord dominated anarchy. Communism was undeniably worse that modern Western mixed economy capitalism, but not a full order of magnitude worse.

There is a wide consensus in the world of economics and political economy, which has merit to it, that the central flaw of communism was too strongly divorcing the benefits of production from the process of producing economic things of value, and thus destroying the incentive for participants in the system to be maximally productive. The incentives present in the Communist system to be productive (and to do so in a high quality way) weren't strong enough.

As an aside, there was also a strong secondary flaw of Communism, which was that it employed centralized economic decision-making to a degree greater than was technological feasible.

The manifest failure that arose from divorcing the rewards for engaging in wealth creating activity from the benefits that arise from that activity is the primary reason that policymakers and politicians are loathe to establish a maximum income or to establish extreme high taxes on very high incomes, on gifts and inheritances, or on property ownership, akin to those in place during World War II and in the immediate decade or two afterwards, even though, in that context, these very high taxes on the very rich did not appear to undermine the incentive of the people subject to them to continue to be economically productive. 

Indeed, as I'll explore in a bit, there is even a plausible argument that these high but not 100% taxes actually created an incentive for the ultra-rich to be more productive, rather than causing them to work less productively for lack of an incentive to do so.

The first order problem which has material impact on the overall economy is that economic rewards have diminishing marginal returns. When you have a net worth of tens of millions of dollars or more that you acquired from a habit of intense full time work that was highly productive, and from good investment decisions that are a result of time consuming research, you are often hard pressed to find ways to consume your economic wealth faster than it is growing, even if you try hard in a way comfortable with your lifestyle, to do so. I see this routinely in my daily life as an attorney for people in this situation.

The United States has thousands of people who are first generation rich with net worths in the hundreds of millions of dollars or more, for whom the diminishing marginal returns of additional economic wealth achieved from working productively have vanished to almost nothing. The ability of these people to consume for the person benefit of themselves and their families is barely influenced at all by whether they work, or within very broad tolerances, the decisions that they make on the job if they do work.

At this level of wealth, making value and wealth enhancing decisions gives their companies more economic power which they get to wield, but when it  comes to the well being of and consumption for themselves and their families, they may as well be playing with monopoly money. Indeed, personal accounts of the lives of the ultra-rich suggest that it isn't even clear if the actual personal use of the marginal increases in wealth that these big shots make when they are active in their businesses is a meaningful incentives that drives them to be more, rather than less, economically productive at all.

These are troublingly thin incentives for people who directly own well over a quarter of the wealth in the entire economy (they earn about a quarter of the nation's income, but wealth is distributed more unequally than income), and control something closer to three-quarters or more of the nation's economic capacity. And, honestly, the incentives for other powerful people in our political economy to make the objectively best decision, like members of Congress, judges, and other elected officials, is also thinner than one might hope to have in an ideal world.

Nonetheless, first generation fortune makers tend to be so habituated to hard, highly productive work, that they tend to carry on doing so long after the marginal consumption benefits of doing so have dwindled to essentially nil. They are working because they enjoy the thrill of the challenges that they face while doing so, and to chase power and fame and their personal dreams for their enterprises themselves.

But there is also a huge swath of people in the U.S. who have vast wealth that they didn't create, mostly because they inherited it, or are otherwise parts of families in which someone else in the family created this wealth. 

One of the most famous economic papers on the subject called them the "leisure class." These people often have the formal power to determine how this wealth is invested, despite having no qualification other than the accident of birth, to make those decisions. Also, even when, as is often the case, they are talented people with the potential to engage in very productive work, these people often end up living self-indulgent lives in economically unproductive pursuits because they can and they have no economic incentive to do otherwise. And, the members of this small but not economically or numerically negligible leisure class are hoarding economic resources for no purpose other than their own amusement that make up a quite significant share of the nation's total economic wealth, despite the fact that there are other people living in severe economic hardship, and despite the fact that there are a great many potential public and private investments that do not get made because the resources are tied up in assets that amuse the members of the leisure class.

Even ardent supporters of capitalism and the status quo generally agree that the leisure class behaves in a manner that is detrimental to our economy in the big picture and wastes scarce resources. But they see it as a necessary cost of giving ultra-productive wealth creators a sufficient incentive to make our economy more productive, even though the veracity of this assertion is, at best, vastly oversimplified, and more likely, much more wrong than it is right, even if it has a small nugget or two of truth buried in it. It is not a good description of what is motivating the ultra-rich who control big business and major economic assets to make more money.

In addition to the issues of the incentive of the "self-made" (relatively speaking only) ultra-rich to work, and the economically problematic leisure class, there is also a third related issue.

A significant number of "self-made" (relatively speaking only) upper middle class people, who are extremely talented and capable of highly productive work, rather than continuing to work out of personal virtue and habit, have been rewarded so generously for their early efforts that greatly reduce their productive activity or entirely retire long before they are unable to work. They retire early because they don't need to work any more to consume everything that they wish to consume. If they had been rewarded less generously for their high productivity early on, they would have worked more hours and more productively to achieve an ability to have satisfactory consumption and would have made our collective economy richer. But instead, because they were rewarded so generously at first, their lifetime productivity is reduced.

The incentive issue that made Communism a failure is more pressing in this last case than in the others, but it isn't that black and white. At the margins, our society would produce more, because these individuals would produce more over their lifetimes, if these highly productive upper middle class individuals didn't receive quite such large rewards for their efforts causing them to have to work more to reach a satisfactory amount of wealth. And, this issue is still significant enough to have material macroeconomic impacts on the size of our economy.

My goal today isn't to identify solutions to any of these issues. That is for another day and other posts. But these flaws in our status quo economy are real, are material, and are severe, to an extent whose materiality is not acknowledged nearly as widely as it should be. 

Some people on the progressive left do indeed say a lot about the problem of the concentration of wealth in our society being problematic. But very few of those who are doing so acknowledge the intrinsic difficulties involved in solving the problem in a way that does more good than harm due to the problems that made Communism a failure. Many of them are convinced that great wealth is dishonest to a far greater extent than is the case empirically. And, many do not recognize that incentives to be economically productive are indeed really, really important, or that there is a serious incentive problem in the world of the ultra-rich, which is extremely important economically to the entire economy.

19 April 2022

Chart of the Day

The income share of the top 1% in the U.S. is near a record high and the trend lines show no real sign that the tendency of the rich to get richer in the United States, which has continued steadily since the early 1970s when it was near a record low, will abate anytime soon.

The previous peak was right before the 1929 stock crash and was driven by the Great Depression, followed by World War II, record post-World War II prosperity and the Baby Boom, and Cold War military conflicts in Korea and Vietnam.

The chart is from an article criticizing Piketty and Saez for overstating the top 1% share of income in economic statistics, via Marginal Revolution (link misplaced). But the long term trend of the two series seem to match very closely, so the criticism is largely immaterial for most purposes. 


Almost every place has some kind of bullying. But this masks important differences that shed light on the societies in question.

In Japan and Korea, bullying is a pervasive and serious problem in schools and workplaces. But there bullying is characterized by bullies abusing power that comes with higher socio-economic status, that authorities overlook, in part for that reason, against victims with lower socio-economic status. In England, the same thing is true, or at least was true prior to very recent history, although perhaps not quite as intensely. Notably, all of these societies have a lot of school discipline dispensed by deputized students - typically a student council disciplinary committee in Japan and Korea, and historically, at least, prefects in British boarding schools.

The U.S. has bullies too, but the character of the bullies is different. The typical U.S. bully is socio-economically marginal and picks on victims who are in some way defenseless getting one up on them so that they aren't at the bottom of the social hierarchy entirely. Bullies in the U.S. in schools and workplaces are also much more likely to have biologically based mental illnesses and/or learning disabilities. While in Japan, Korea, and England bullying is an abuse of privilege, in U.S. primary and secondary schools, bullying is an act of losers. U.S. primary and secondary schools rarely vest disciplinary authority in students, with student councils being more social event organizing committees than bodies with any power.

This kind of crass bullying by losers is mostly absent in higher education in the U.S. (the losers don't go to college), where there is instead there is some "abuse of power" bullying although much more limited, mostly within fraternities and sororities, and by professors abusing students who are especially dependent upon them such as graduate students dependent upon their thesis advisors. 

Crass bullying is also largely absent from middle class workplaces in the U.S., although there is some "abuse of power" bullying by superiors over subordinates in the workplace, most typically characterized as sexual harassment. Still, the "me too" movement has produced swift and severe consequences for every C-suite executives in both big businesses and academia, for those caught doing so, and even the anomaly by U.S. standards, of abuse by priests in the Roman Catholic church has come to roost and to be addressed, although it is less clear that change has occurred in other, more fragmented religious institutions, non-Catholic private schools, and in various youth oriented groups.

The crass bullying by losers seeking to be not quite at the bottom seen in elementary schools and high schools in the U.S. does manifest, however, in other institutional settings, especially in the prisons often leading to prison gangs and prison rape, and in abusive hazing in the U.S. military, mostly in the enlisted ranks. This accompanies institutions like internal management of prisoners by prison "trustees" and by limited authoritative self-governance within military units by non-commissioned officers.

In contrast, in Scandinavia and much of Northern Europe, prisons are quite tame by comparison, practically free of prison gangs and bullying of one prisoner by another.

Extreme bullying appears to be pervasive in the Russian military and to a great extent in other military forces built on the Soviet model. It also appears to be not uncommon in other facets of society, like schools, workplaces, and prisons, although I don't know that society well enough to distinguish the extent to which it involves "abuse of power" bullying or crass bullying by losers. Perhaps both area present.

I have the same perception of Latin America, although "abuse of power" bullying seems to be a very real thing there, in addition to crass bullying by losers.

One of the things that is admirable about England and Japan is how remarkably good that people in these societies are at being self-organizing, which manifests particularly in wartime and in natural disasters. But the institutions of self-governance from a young age and internal hierarchy that make this possible also fosters abuse of power bullying.

In contrast, Americans are horrible at self-organizing, but also much more free of abuse of power bullying as a result.