Glasses Half Full For Russian Passengers

John Hawks tweets:

In praise of dog not barking: Russian passengers break into applause after every perfectly ordinary landing.

From here (July 13).

Keep The 19th Century Journalist Style Alive

Who knew that the writing habits of 19th century newspaper writers would resurface on the Internet today at a blog called Wonkette. Consider this headline and lede:

WAR FOREVER

Wisconsin Becomes Orgy of Chaos As Recall Elections Begin

by Kirsten Boyd Johnson

1:41 pm July 12, 2011

The forces of good and evil resume their bilious clouded swirl over the state of Wisconsin today as primary voters go to cast votes in the state’s recall elections against six of Scott Walker’s senate puppets, and it is already just an orgy of dead fetuses and robots.

The last time I read such stirring words was in a progressive Denver rag's obituary for Colorado Supreme Court Justice Steele, on display in my child's school, from the turn of the century.

Flying Cars Are A Bad Idea

I'd don't agree with Steve Sailer on much, but I do agree with him, for substantially the reasons that he identifies, that flying cars are basically a bad idea.

Brighton Police Covered For Wife Beating Fireman

Randy Cleveland, is a "Brighton[, Colorado] firefighter faces more than a dozen charges, including sexual assault, domestic violence and child abuse, after allegations of years of attacks on his wife."

Cleveland is an abusive husband straight from central casting. He physically and emotionally harms his wife, he sweet talks police officers into doing nothing out of respect for his position as a firefighter, he stalks his wife in a motel where she had fled from him, he threatens to kill puppies.

Police took no action in response to at least three 911 incidents when they responded to the house.

[The wife] called Brighton police last Oct. 15. That day, she alleged, arriving officers "high-fived" Cleveland, and after she told the officers that the abuse that day was verbal, not physical, they decided to have her stay in a hotel for a couple of nights. No charges were filed.

The first contact that was made with the Adams County DA's office also trivialized the allegations. Eventually, an uninvolved prosecutor in the DA's office learned of the case from the wife at church, intervened, and managed to get the case turned over to Boulder's District Attorney acting as a special prosecutor, who is prosecuting the case vigorously.

Brighton police initially took the case to the Adams County district attorney's office, but no charges were filed then either. According to District Attorney Don Quick, the investigating Brighton officer portrayed the allegations as a situation of "he said, she said."

"At the time, there were not injuries apparent or made note of by the officers," Quick said.

Later, however, the woman told another of his prosecutors about the abuse during a conversation at church, and Quick asked Garnett's office to investigate.

A Boulder investigator took over the case May 11, and eight days later a magistrate judge signed an arrest warrant for Cleveland.

It is a little hard to tell if the Brighton police are solely at fault in this scenario, or if at least some deputy DA in the Adam's County DA are also at fault from the facts reported so far.

It bears all the marks of a police cover up, which John Bradley, the spokeman of the Brighton Police denies emphatically with about as much credibility as Gaddaffi's absurd broadcasts from Tripoli claiming that everything is peaceful and happy, and that he is in control.

Adams County has previous brought us instances of gross corruption in road contracts managed by the county commissioners, improperly adjustments of property assessments for contributors to the county assessor, and improper diversion of funds by the treasurer of the county's Democratic party organization. Adams County is a blue colar, Democratic leaning Northern suburb of Denver and Brighton is the fast grown Levittown style suburb that is the county seat.

Still, Adams County is hardly exceptional. Corruption is bipartisan in Colorado. Republicans in Jefferson County (a middle class suburb west of Denver) have been a hotbed of questionable conduct and resulted in the prosecution of its treasurer for kickbacks (IIRC he was acquitted after a mistrial the first time around), Republicans in Araphahoe County brought us neopotistic, sex crazed Tracy Baker as Clerk and Recorder, and a DA who has been sanctioned by unethical conduct while in office by the state supreme court and made other negative headlines for questionable conduct like conviction incentives for prosecutors. The former Larimer County Republican Party chair was just arrested on a felony county related to management of their monies. The DA in Montrose County faces charges related to improper conduct towards his ex-girlfield that are being handled by a special prosecutor from the Attorney General's office, and their unqualified coroner set off political sparks by declaring a routine organ donation by a local hospital to be murder based on inaccurate information on the Internet. Castle Rock's police ignored urgent pleas from a women with a restraining order that produced a pile of dead bodies and a Supreme Court case establishing that police have no affirmative duty to try to protect anyone, even if state restraining order laws say so. This list is hardly exhaustive.

Keeping local government officials out of trouble is a never ending full time job.

The good news is that a judge, who owes nothing to local government because he is not an elected official and not appointed by local officials, eventually issued a restraining order in the case, and a special prosecutor (who may end up charging the bad cops as well as the abusive husband) was appointed based on a strong norm in Colorado for doing so in cases where there is a potential for local law enforcement officials to be at fault; the case involving the DA for Montrose similarly had a smooth hand off. Notably, in both cases, the investigation was handed off to a special prosecutor of the same political party as the DA taken off the case.

Since law enforcement is handled locally and the judiciary is part of state government, there are clearer heads at the state level to keep local corrupt officials in line.

The bad news is that the Brighton Chief of Police, like almost all law enforcement management types, has denied that his men did anything wrong, even when the evidence that they did is very convincing. He should have thrown the bad officers under the bus, immediately suspending them while an investigation was pending, and didn't. The city council and mayor and if there is one, a city manager, could step in and intervene, but so far, they haven't done so. Denver is still struggling to reach acceptable ways of handling cases of police misconduct and finally starting to make process after a decade or so of trying. Brighton apparently isn't there yet.

Principal Reductions In Mortgage Modifications Follow Pattern

Banks will sometimes modify mortgages to reduce principal if they are already shown at a discount on their books due to an acquisition from another bank, especially if the mortgages are currently not in default, but not if the write down will produce an accounting loss for the bank.

It seems that Wells and JP Morgan are happy to do principal reductions only on the mortgages they bought at a discount from Wells Fargo and WaMu respectively; Bank of America, meanwhile, which inherited a bunch of these loans when it acquired Countrywide, is not doing principal reductions, and I don’t think it’s a coincidence that the Countrywide loans were bought at very close to par.

The behavioral psychology here is very easy to understand. No bank wants to admit that it wrote idiotic loans, and write down its own assets from par. Meanwhile, it’s much easier to write up an acquired asset, if the amount you reduce the loan is less than the discount you bought the loan for in the first place.

Economically speaking, however, what the banks are doing here does not make sense. Either writing down option-ARM loans makes sense, from a P&L perspective, or it doesn’t. If it does, then the banks should do so on all their toxic loans, not just the ones they bought at a discount. And if it doesn’t, then they shouldn’t be doing so at all.

The truth is, of course, that banks should be doing principal reductions, and they should be doing them on lots of their loans, rather than just the ones they bought cheap. And the fact that they’re already doing this, entirely voluntarily, on some of their loans is the best possible indication that it makes perfect economic sense to do so on all of their loans. Even if doing so might involve admitting that the subprime crisis still isn’t fully over.

The implication is that the financial accounting reform may be a key to responding more rationally to the current and future asset bubbles.

The results also shed doubt on the prevailing assumption that banks act in an economically rational way, which makes reforms, like cramdowns in bankruptcy, that force lenders to act rationally rather than based on the reputational effect of a decision for actors in the organization look attractive.

Government Spending Stimulates The Economy

Econometric analysis over a wide range of circumstances shows that government spending and investment generally produce somewhat more economic benefits to the economy than the amount of the spending itself (which is called a "multiplier effect"), although the benefits are fairly modest and rarely as much of a full dollar of economic gain in addition to the government spent dollar.

Critics of government spending restraint during bad economic times, of the kind prevailing at the moment, compare this policy to the policies of Herbert Hoover, whose lack of leadership contributed to the Great Depression and compare this approach unfavorably to the Keynesian economic policies of FDR. They note, for example, that weak job growth at the moment is substantially due to government layoffs.

Life Sucks In Much Of The World

Much of Africa, Afghanistan, Iraq, Haiti, Yemen, Pakistan, Bangladesh, Sri Lanka, North Korea, Nepal and East Timor all made the 2011 top sixty failed states list of Foreign Policy magazine. A nation generally finds it way onto this list with dire poverty, political violence, and poor public health.

Judge Determined Death Sentences In Alabama

Of the 34 states with the death penalty, Alabama is the only jurisdiction where judges routinely override jury verdicts of life to impose capital punishment. Since 1976, Alabama judges have overridden jury verdicts 107 times. Although judges have authority to override life or death verdicts, in 92% of overrides elected judges have overruled jury verdicts of life to impose the death penalty.

Twenty-one percent of the 199 people currently on Alabama’s death row were sentenced to death through judicial override. Judge override is the primary reason why Alabama has the highest per capita death sentencing rate and execution rate in the country. Last year, with a state population of 4.5 million people, Alabama imposed more new death sentences than Texas, with a population of 24 million.

Override is legal in only three states: Alabama, Delaware, and Florida. Florida and Delaware have strict standards for override. No one in Delaware is on death row as a result of an override and no death sentences have been imposed by override in Florida since 1999. In Delaware and Florida, override often is used to overrule jury death verdicts and impose life -- which rarely happens in Alabama.

From the Equal Justice Initiative via the Sentencing Law and Policy Blog.

The study will, very likely, be the basis of court challenges to and efforts to legislatively change the practice.

Iqbal Almost Doubled Likelihood Of Motion To Dismiss Grant

The most controversial decision in civil procedure in recent history was the Twombly/Iqbal decisions of the U.S. Supreme Court that made it easier to dismiss a case on the face of the Complaint filed in federal court for failure to state a claim in certain kinds of cases (the applicable rule is 12(b)(6) in the federal rules of civil procedure). Under the previous rule, these kinds of motions to dismiss, which are sometimes described as "so what" motions because they argue that even if everything alleged is true that no legal remedy is available, were extremly hard to establish.

The latest statistics confirm that these decisions did indeed matter:

The results indicate that even taking out the pro se cases, the odds of a court granting a 12(b)(6) motion, at least in part, as compared to denying the motion, were expected to be 1.79 times greater under Iqbal than under Conley (p = 0.002), all other variables held constant.

Second, I used only the cases in my database from 2006 (Jan to Dec) and from 2010 (Jan to May 18), and otherwise limited as described above (no pro se, no magistrate judges). Here, the results indicate that even leaving out the pro se cases, the odds of a court granting a 12(b)(6) motion, at least in part, as compared to denying the motion, were expected to be 1.92 times greater in 2010 than in 2006 (p = 0.013), all other variables held constant.

Run of the mill cases are largely unaffected. The main category of cases where Iqbal and Twombly make a difference are cases where the harmed party must show some kind of behind the scenes activity by defendant insiders which is merely circumstantially established at the outset and then, in past practice, revealed if present during the discovery process. The doors to the federal courthouse are now largely closed to such cases without a whistleblower or some form of domestic espionage. The ruling does not directly apply to state courts.

These motions remain rare, affecting something on the order of 1% of cases on the federal docket, and are granted about three-quarters of the time (up from about two-thirds of the time under prior law).

Distressed Sales Dominate Las Vegas Real Esate Market

In Las Vegas, "47.2% of the sales in June were bank-owned properties, and another 21.6% were short sales." Combined, 68.8% of Las Vegas real estate sales in June were distressed, with sales going forward basically only to the extent that banks decide that they will. Given that a significant percentage of homes for sale in the market at any given time are owned free and clear, the percentage of sales of mortgaged homes for sale that are distressed is much higher.

Thirty-Four Years Of Stagnant Hourly Incomes

Among two-parent families, median earnings did rise by an inflation-adjusted 23% from 1975 to 2009. But the parents’ combined hours worked increased by 26% during the same period–accounting for most of the income gains.

Via Tyler Cowen.

Demographics other than two parent families (including single parents) in many cases saw hourly income declines. The two parent case also conceals declining income for men matched by rising income for women.

The Limits Of Written Communication

VC offers up a joke that makes clear the limits of trying to communicate in writing.

Sentencing As A Subnational Federalism Issue

In California, "state prison overcrowding is due in large part to county decisions about how to deal with crime. . . data from 2000-2009 [show that] . . . California’s counties use state prison resources at dramatically different rates, and, moreover, that the counties which use state prisons the most have below-average crime rates. . . . incarceration in state prisons is one policy choice among many, not an inexorable reaction to violent crime.

Counties can and do make different choices about how to respond to violent crime, including the extent to which they use prison. . . . [L]ocalities are crucial - and critically underexamined - contributors to state prison populations. Decisions are made at local levels about prosecution, investigation, plea bargaining, and sentencing, and these decisions are made by officials who are either elected locally (such as DA’s, judges, and sheriffs) or appointed locally (police and probation officers). Local policies and policymakers affect the state’s corrections budget, even though the state has no say in designing or implementing these policies."

From the abstract to "Tough on Crime (on the State's Dime): How Violent Crime Does Not Drive California Counties' Incarceration Rates -- And Why it Should" by W. David Ball.

The notion that criminal justice decisions have budget implications that work like an entitlement program, mandating spending with little regard to the amount appropriated by the state budget for the purpose, is familiar. The notion that local exercises of discretion in the criminal justice system can be as important as the text of the state criminal code in driving incarceration rates is not unfamiliar, if less commonly observed.

But, the notion that disparities in criminal justice discretion are a distributive justice issue between local governments, with excessive incarcerators imposing burdens on other state taxpayers who have no say in those decisions is a conceptual breakthough.

The article linked looks at these issues in California, but they also come up in Colorado, where suburban Denver's Arapahoe County's notorious prosecutor exercises discretion to impose longer and more expensive sentences of similarly situated defendants than prosecutors elsewhere in the state, such as the neighboring urban City and County of Denver. But, I'm not aware of anyone that has done a study looking at the issue from the frame that Ball does in Colorado, even though all or almost all of the relevant data are fairly easily available online in government statistics.

The high sentences sought in Arapahoe County in the criminal justice system impose fiscal burdens on other Colorado taxpayers in a way similar to, but less transparent than the efforts of the exurban Denver area Douglas County school board to unilaterally establish a voucher plan that would give students attending private (mostly religious) schools a partial share of the per student state funding that the district receives (and no local money) if it can succesfully make the case that voucher students count for school funding formula purposes. In other words, both proposals are to a significant extent money grabs at a scarce state general fund by affluent communities led by politicians who have a strong public ideological opposition to taxes and government spending.

Framing sentencing law as a fiscal issue rather than a human rights issue has produced a major withdrawal from war on drugs and tough on crime politics driven long sentences for relatively minor crimes in a variety of conservative leaning political jurisdictions. Perhaps a focus on considering local sentencing discertion in a fiscal frame could elicit further reforms that address abuses of discertion by local political actors in this process, where traditional liberal and academic arguments for sentencing reform have not.

Jobs Situation Still Dismal

Job losses in this recession remain, by far, greater and longer lasting than in any economic downturn since the Great Depression. While economic data from before the Great Depression aren't as precise, the financial crisis that began in late 2007 is still in the running to be the second worst economic downturn in U.S. history from a jobs perspective. Only one U.S. recession since the Great Depression has had a higher peak unemployment rate, the early '80s recession with a peak of 10.8 percent, but it was a short sharp shock that quickly bounced back by comparison.


In June, the private sector created about 57,000 jobs, about half the number neeed to keep the unemployment rate constant. But, those gains were muted by the loss of 18,000 public sector losses.

The unemployment rate increased from 9.1% to 9.2%, and the participation rate declined to 64.1%. Note: This is the percentage of the working age population in the labor force.

The employment population ratio fell to 58.2%, matching the lowest level during the current employment recession. . . . [a] measure of labor underutilization that includes part time workers and marginally attached workers, increased to 16.2%, the highest level this year.

The BLS revised down April and May payrolls showing 44,000 fewer jobs were created than previously reported.

The average workweek declined slightly to 34.3 hours, . . . "average hourly earnings for all employees on private nonfarm payrolls decreased by 1 cent to $22.99. Over the past 12 months, average hourly earnings have increased by 1.9 percent." . . .

Through the first six months of 2011, the economy has added 757,000 total non-farm jobs or just 126 thousand per month. There have been 945,000 private sector jobs added, or about 158 thousand per month. This is a better pace of payroll job creation than last year, but the economy still has 6.98 million fewer payroll jobs than at the beginning of the 2007 recession.

There are a total of 14.1 million Americans unemployed and 6.3 million have been unemployed for more than 6 months.

Despite the dire situation, nobody in Washington is talking about stimulus and public sector layoffs killed 188,000 jobs in the first half of this year at a time when the economy needs more job creation, not less. The number of people working part-time because they can't find full time jobs and the number of people unemployed for more than six months are at near record highs.

Jobs have been below their peak for 42 months and are nowhere near returning to where they started. The longest previous post-war recession in jobs terms (the decline and recovery 2001 tech bust) created jobs to replace those lost in that recession in 48 months. But, that jobs slump was much more shallow; at its worst point 2% of payroll jobs were lost, while we are still 5% below peak now and we 6.3% below peak at the low point.

NPR noted this morning that GDP has actually been increasing for two years now, but the jobs situation is not catching up. Businesses are hoarding cash instead of investing. Interest rates remain remarkably low, but that isn't spurring more spending and borrowing. The leading economic indicators are negative, suggesting that we might even face a double dip recession.

This is happening at a time when the immigrant population of the United States is shrinking or constant. Inflation remains modest.

Politically, we are about six to eight months from the point at which the state of the economy starts to influence the next Presidential election. More pressingly, the U.S. will break though its debt ceiling by August 2 if corrective action isn't taken, possibly triggering a constitutional crisis or a default of the U.S. national debt that could have catastrophic economic consequences for the nation by driving up the interest rate that Treasury bond holders are willing to accept at a time when U.S. bonds have been a safe haven as many other developed nations are having to restructure or default on their sovereign debts and crisis after crisis looms on the horizon.

Congressional Partisanship At Record High

The partisan divide between the Democrats and Republicans in the United States Congress is currently at an all time high. Partisan divides were lowest in the mid-20th century, but are higher now than they were in the late 19th century and early 20th century.

Posed less negatively, the Democratic and Republican party are more distinct than every before rather than being blurred by politicians who don't fit either party's mold, in part, due to "realignment" with one time Northeastern moderate Republicans now identifying as Democrats, and one time conservative Southern Democrats now identifying as Republicans in federal elections.

Deadlock isn't always a bad thing when the country is divided. A deadlocked nation may be one that shouldn't be making major changes from the status quo in the law. But, deep partisan divisions and divided government may make action entirely unachievable even on issues that necessarily call for some action to keep the institution of the federal government functioning, like the debt ceiling, appointments to bureaucratic posts, or approval of a federal budget.

The Innocence Effect

[S]hadow-of-trial models [of plea bargaining] commonly pay little attention to defendants’ culpability per se. To wit, innocents – who may well face a higher average probability of acquittal at trial – are expected to demand a more lenient sentence in return for their guilty plea. However, if the plea offer is accurately adjusted to defendants’ probability of conviction, innocence in itself plays no role in the defendant's decision. This assumption, which is jointly held by both parties to the plea bargaining debate, is false. . . .

[I]nnocent defendants are significantly less likely to accept plea offers than their guilty counterparts, even when these offers appear objectively attractive in light of the evidence against them and the expected sanction at trial. . . .

[T]he implications of the innocence effect and its underlying causes for the plea bargaining debate . . . requires both camps to reevaluate their policy prescriptions and offering some new proposals of our own to minimize false convictions, better to protect the innocent, and improve the plea bargaining process. . . .

As a result of the innocence effect, plea bargains probably do not increase the rate of wrongful convictions, as argued by some of the plea bargaining opponents, but also do not promote the interests of innocent defendants as argued by the plea bargaining supporters. . . .

One way to reduce the negative effect of plea bargaining on the sentences of wrongfully convicted defendants is to limit size of the plea discount. The law can instruct judges not to approve a plea bargain if the post plea sentence is significantly lower than the sentence expected after a jury trial conviction. If the prosecution’s ability to offer significant sentence discount in plea bargaining would be limited, defendants requiring considerable discount in exchange for their guilty plea would not bargain. Since the innocent demand, on average, significantly lighter sentences than guilty defendants, the proportion of innocent defendants among those who plead guilty will be smaller. . . . Restriction of the guilty plea discount will minimize the gap between the sentence imposed on those who opt for a trial, including relatively many innocent, and that of those who plead guilty, most of whom are guilty. The innocent defendants who will be convicted in jury trial will still be sentenced for longer terms than the guilty pleaders, yet, the difference will be smaller. . . .

When it comes to sentence bargains, it is not a particularly difficult task. Courts can be instructed to reject plea bargains if the proposed sentence is substantially lower than that imposed in similar circumstances after a trial. Limiting charge bargaining is much harder, but it might still be a possible task. . .

Another alternative to plea bargaining can be bargaining for a simplified criminal process. The law can encourage parties to replace plea bargains with agreement on shorter and simplified process in return for a sentence discount. Parties can agree on a bench trial instead of a jury trial, agree that the defendants will be the first to testify, before the case for the prosecution is presented, or make other stipulations which allow a cheaper trial for the prosecution.

True, in such a simplified process, the risk of mistake might be larger. Yet, innocence defendants in such process can gain a discount for the agreement without pleading guilty – something which they are reluctant to do. Moreover, defendants in such simplified proceedings will maintain the right to contest the case, and, if successful, gain an acquitted, a right they waive in regular plea bargaining. Innocent defendants who may be reluctant to plead guilty, would often prefer a simplifies process in which they are not required to plead guilty, are able to avoid the damaging consequences of prolonged litigation and benefit a lenient sentence in exchange for saving judicial time.

True, the defendant in such a simplified trial might have a smaller chance of acquittal. As a result, it is possible that defendants who would have been acquitted in a full trial may be convicted in a simplified trial. Nevertheless, it can be said in confidence that the advantages of the simplified procedure outweigh its disadvantages.

First, the proposed procedure will promote the interest of the innocent defendants by allowing them to benefit from a real legal process which is aimed at finding the truth while benefiting from a sentence discount. Indeed, the cost of this procedure is higher than that of a guilty plea, but the gap between the two is not so big when it comes to substantially simplified process. Additionally, most of the guilty defendants who plead guilty today will continue to do so even when offered a simplified process is an option because in order to be acquitted in such a procedure, they would have to lie to the judge. In most cases that involve conclusive evidence, defendants will find it psychologically difficult to lie to a judge; mostly due to the fact that it probably will not help their case. As shown above, guilty defendants tend to plead guilty simply because they are guilty.

Therefore most of those who plead guilty will continue to do so even when they can get a similar discount in a simplified process. Furthermore, some of the defendants, who in the absence of an alternative procedure would choose a full trial, would now choose the simplified procedure. As a result, judicial resources will be spared and could be channeled towards the implementation of the simplified process. In light of this, the simplified procedure could advance the interests of the innocent without the need for additional resources.

Second, the procedure may also reduce wrongful convictions. Despite the reluctance of innocent defendants to plead guilty, some of them succumb to the desire to quickly end the proceedings or to the fear of a wrongful jury trial conviction, and thus plead guilty. The simplified procedure could provide these defendants an opportunity to challenge the charges against them. In light of all of this, we believe that the benefits of the proposed procedure, in view of innocent’s reluctance to plead guilty, outweigh its disadvantages. Moreover, even in cases where a person might be mistakenly convicted in a simplified process, the moral gravity of such conviction will be smaller because it will be reached after an honest judicial attempt to find the truth. Studies on procedural fairness even indicate that defendants who are not satisfied with the outcome of the trial tend to accept it if they were given an opportunity to argue their case before an impartial arbiter before the verdict. Simplified procedure might be better in allowing the defendant a saveopportunity to present his story, than the adversarial jury trial.

From here.

The process bargaining elements of the authors proposals are expressly a part of the U.S. military justice system, in which a defendant can sacrifice due process protections in exchange for a lower maximum sentence, if the prosecuting authority files a charge that permits that process to be used.

One procedural tool to limit charge and sentencing bargains would be to allow defendants to make a post-sentencing motion to reduce their sentence to some multiple of the worst case scenario that the defendant would have faced under any plea deal offered by the prosecution prior to trial.

Another reform that might be important is to review particular proposed or currently available criminal procedure protections of criminal defendants to determine which do the most and the least to help innocent defendants.

Gains From Economic Growth No Longer Shared. Why?

The U.S. economy, and European economies as well, have seen a massive increase in the extent to which the gains from economic growth are concentrated in a few, rather than shared widely by all in the economy.  This is mitigated in Europe, and to a much lesser extent in the United States, by a combination of tax policy and social welfare benefit systems.  But, the fact that the new trend has endured for a generation across dozens of countries suggests that it is not simply a matter of policies of particular administrations. 

The folks behind the poster at the top of this post probably have roots in the union movement, and more widely shared gains from growth were found in an era when unions were rather strong.  But, there is room to question the cause and effect relationship in that era.  Were unions strong because workers were in a good bargaining position, or were workers in a good bargaining position because they were unionized?  There is good reason to thikn that the later was true, at least to some extent.

One interpretation is that the technological foundations of our economy have made work traditionally done by less skilled workers more efficient and hence reduced demand for these workers.  For example, e-filing of legal pleadings has gutted the demand for copy room workers and couriers for law firms and reduced postal service volume.  Any one of these changes individually may be insignificant, but one change after the other for decades could have this kind of effect.  Meanwhile, more skilled jobs that are not succeptible to automation have not been eliminated but benefit from the greater productivity that technology has imparted to less skilled workers.  More productive low skilled workers have not been able to reap the full value of their labor in this scenario because the number of people who can do the work greatly outnumbers the number of people needed to do the work.  This hypothesis is behind the characterization of the past few decades as an "information economy" or as an economy where gains are concentrated among "knowledge workers" or a "creative class."

A close variant of this theory suggests that much of the post-war boom was a matter of retooling a wartime economy to meet long unmet domestic demand and shortfalls in the productive capacity of the rest of the war ravaged world, so that not much innovation was required to see record growth at first, but that this situation was exceptional and vanished as routes to greater productivity had to be invented rather than simply being restored or imitated.

Another, somewhat similar analysis would suggest that capital has become a more important factor, relative to labor, in producing economic value.  Physical and monetary capital is much more unequally distributed than human capital, and hence those who have it have benefited greatly, while those who do not have not shared in the wealth.  This fits with the fact that the end of the 1979-2008 time period identified is one where the financial sector had huge profits and much higher compensation levels relative to the "real economy."  But, it also challenges that assumption that efficient markets allocate capital through lending and equity investment transaction to people whose ability to put those assets to work is greatest; an analysis that would seem to mitigate inherited wealth biases.

Of course, it certainly isn't impossible that elite levels of knowledge and skill and great amounts of capital are both necessary for growth and hence share in it, while the relative economic importance of those who are not exceptionally smart or skilled or rich has declined.  Thus, we might have a bifurcated ruling class split between the capable and the wealthy, that leaves out everyone else.

These theories, because they are rooted in economic fundamentals, have the unfortunate tendency to be rather fatalist.  Without further elaboration about what exactly the economy needs in terms of skill sets and how we can broaden the base of people who have those skills, it suggests that there are not any good short to medium term policy fixes to these inequalities in initial market allocations of wealth and that even long term policy fixes rely on assumptions about returns to education and training and other economic policy fixes that are at best unproven and may not work.  If economic value has more to do with IQ and personality than with the value added by education which serves as much as a sorting device as an activity that makes someone more useful economically, public policy may have little capacity to redress gaps in human capital value between the bright and the less bright except through redistributive policies.  Policy may be able to have more impact on the availability of capital, but Americans have historically been skeptical, frequently with good reason, of the returns that result from investment decisions made by government investments in the private sector relative to results produced by the private financial markets.  Government investors tend to be more forgiving of failure than the private sector to a fault.

A third interpretation is rooted in terms of competition both with foreign firms and domestic immigrants.  In this theory, foreign firms in less developed economies have lower labor costs and less costly regulations and taxes, giving them comparative advantage in markets where it is practical for work to be offshored and their less skilled workforces to compete with workers in the U.S., for example, in labor intensive manufacturing enterprises.  Similarly, immigrants to the U.S. from less developed countries, many undocumented, may be willing to work for lower wages on less favorable terms because they are still favorable relative to the labor markets in their homelands, and this competition drives down the market price for all workers, native and immigrant, who compete in the same markets.

A fourth interpretation sees union busting facilitated by weaker labor laws, and pro-big business economic policies as important in this trend.

Both these theories argue that economic policices have promoted cheap labor.  These theories are intuitively attractive, not least of which because their roots in government policy rather than economic fundamentals suggest straight forward solutions to our woes: restrict free trade, limit immigration, and strengthen protections for unions.

But, I am not very comfortable that the cheap labor theories are correct.  Growth in pre-tax, pre-social welfare benefit incomes have not been much more equal in heavily unionized France and Germany than they are in the United States which is much less labor friendly.  Countries like Germany and Japan have continued to have heavily manufacturing oriented economies despite compensation levels of manufacturing workers that far exceed their foreign competitors without having profoundly different international trade regimes than those of the United States.  Econometric studies of the impact of immigration on the wages earned by native born workers have shown the effects to be surprisingly modest and limited to fairly narrow subsets of the workforce.  Economic immigration has been drive to a great extent by the existence of opportunities that native born workers are not filling well for whatever reason.

Economists widely share the view that freer trade in goods and services tends to increase economic output, suggesting that restrictions on free trade and strict immigration laws may do more harm than good.  Unions clearly have some impact on the distribution of profits from enterprises, but it isn't obvious that they have much of an impact for better or for worse on overall economic growth rates.

Japan seemed to be following more of a shared growth model than its competitors, but has been so hard hit by deep recessions that there hasn't been much growth to share in recent decades, so it is hard to confirm that hypothesis.  But, this too could be a product of an economy that, at first, was thriving on imitation rather than invention of more productive technologies and economic institutions, much like the U.S. in the post-war, post-Great Depression era.

Whatever the cause of rising inequality in incomes, there is also the question of what to do about it.  We could follow the European model of redistributing income to make up for the underlying economic trends, or could continue on our current track of treating the market allocation of wealth as presumptively legitimate.  Neither approach seems to be particularly favored empirically in determining the productivity or economic output of a society.  The wealth of nations is indifferent to even significant redistribution of wealth if done well and gradually.

Our future may be that of Japan, a "great stagnation" in which economic growth declines dramatically as all of the low hanging fruit of ideas that could improve productivity are picked, and innovations become more scarce.  The seemingly inevitable end of a global economy based on "cheap oil" is also not very encouraging.  We could move from a regime of unequally shared growth to one in which there is no growth to share.

Is it any wonder that economics is called "the dismal science?"

Six Years of Wash Park Prophet

Wash Park Prophet has its sixth anniversary last Sunday.  Not long ago, I split it into two parts, Dispatches from Turtle Island (see the sidebar) and this blog, with the former covering mostly scientific topics and in general everything which involves things that transcend things local, political and legal.  There were 5,448 posts in the first six years at this blog.

African and Near East Update

* South Sudan less than two weeks from becoming a new nation. There is still unfinished business and conflict, however. Nuba, which is geographically in North Sudan, but ethnically and politically more like South Sudan has seen continuing violent conflict within the last month and sees itself as stranded on the wrong side of the border. Ethiopian peacekeepers have moved into an oil rich contested border region that has seen recent clashes (also on the wrong side of the proposed border). Darfur (essentially all of Western rump Sudan) remains a powder-keg of disaffected people, if not the full fledged genocide in progress that it was - but independence won't necessarily help because the oppressed populations there are a minority. South Sudan also faces the challenges involved in having a tremendously uneducated people with an economy left in tatters by decades of war.

* Morocco has passed a new constitution that in theory turns the nearly absolute monarchy into a constitutional monarchy a bit like that of the British monarch in the period between that when the monarch was absolute and the one when the monarch was purely symbolic. The military and foreign affairs remain royal perogatives, but the elected legislature has a greater say in domestic affairs and the courts are supposed to be more independent. The Moroccan king is fairly popular at the moment, so in the short term it may not matter much.

* In Yemen, the beginning of the end of the dictatorship seems near as the ruling dictator is in exile, but violent unrest in the divided country continues as a new regime takes shape.

* The civil war in Libya, in which the Western powers have united against the outgoing regime is not at a stalemate, but the outgoing regime is seeing its power slip away slowly and domestic politics in the U.S. aren't strongly mobilized in favor of our halfway involvement.

* Sudan's reform protesters have been among the least successful of the Arab spring who were facing mere dictators rather than monarchs. They regime has not hestitated to kill many hundreds of protestors and to apprehend every able bodied man and boy in some villages. Refugees have poured into Turkey and Lebanon. In some cases, refugees first fled Iraq and now must flee again. Reform proposals have been half-hearted and not won popular support.

* Dissent was crushed in Saudi Arabia and in Bahrain (with Saudi support). There is discontent in these places, but it is only the usual boil, not of Arab spring proportions.

* Egypt seems to be struggling to consolidate the revolution. The old regime is gone, but the successor is not entirely clear. There were riots when police were acquitted for actions taken during the uprising.

* In Palestine, even elections for posts such as medical society board of directors have partisan contestants.  The Israeli imposed embargo of Gaza also increasingly appears to be counterproductive overkill as a relatively educated and healthy population is denied the means to import basic building supplies for civilian projects which must instead be smuggled into the area.  Greek forces headed off a high profile publicity boat mission there by human rights activists, but situation remains, as ever, unstable.

 * Vile suicide bombings continue in Afghanistan.  Iraq has been comparatively quite lately as the U.S. prepares its departure from the region.  Related to Afghanistan, militant leaks in the Pakistani security complex have been released and an apparently military linked hit killed a reporter who revealed those leaks.

Post-Long Weekend Observations

* Denver's Mayor-Elect Hancock will be sworn in on the 18th of July. Bill Vidal, the outgoing interim Mayor has done a better than expected job in the interim since outgoing Mayor Hickenlooper took the Governor's office, in terms of the budget and police discipline. He's benefited from not owing anything to anyone and not having to run for re-election.
* Byers School, which has sat vacant since the Denver School of the Arts left for the old University of Denver music campus near Stapleton has a new tenant lined up, a new Denver School of Science and Technology charter school set to open, if I understand the matter correctly, in the 2013-2014 school year. This fills a huge hole in the West Washington Park neighborhood with a wonderful bit of infill, adds a good new educational choice to the Denver Public Schools, and makes a large number of people, my family included, who lobbied for it happy.
* My Fourth of July weekend found me at the Renaissance Festival in Larkspur, Colorado. A certain number of paid models and Renaissance Festival enthusiasts dress in costume - not strictly of any one historical period and often veering into fantasy. Among the most striking, because they come across as quite natural at first glance, were the little devil horns that some people wore, and the furry tails that a number of people (mostly women) affixed to their outfit as if they were natural. Also eye catching in general are other forms of headgear like garlands and fairy antenna, full back angel wing tattoos, and crows masks which are surprisingly frightening.  Genuine wings of angelic, fairy, and birdlike varieties were also in evidence, but rather less effective.  Opponents of weapons control will note that there are few other events where so many people openly bear arms (some fake, but a significant number of the genuine stainless steel and deadly variety).

* The Greeley Stampede, which I also made my way to this weekend, was more notable for the very strong presence of the National Guard, a lot of cliche Western Art, fried twinkies, alligator wrestling, and mutton busting.

* Aurora, Colorado is proposing major tax breaks and zoning accomodations for a Gaylord entertainment sponsored convention center project that, IMHO, is the last thing that the metro area needs right now.

* I don't recall if I mentioned the major new water compact reached this spring under Governor Hickenloopers guidance.  It diverts water from the Western Slope to the Front Range in exchange for giving the Western Slope more control of future diversion plans and other compensation.  The diversion plans include new hydropower for the state.

* Disney already has a radio station, a television station, multiple international destination amusement parks, a movie studio and a major line of characters.  How long will it be before they have a newspaper and sports leagues as well?