Greg Mankiw makes a case for graduate school education:
Apart from their bank accounts, Gallup finds education to be the greatest difference between the wealthiest 1% of Americans and everyone else. The Gallup analysis reveals that 72% of the wealthiest Americans have a college degree, compared with 31% of those in the lower 99 percentiles. Furthermore, nearly half of those in the wealthiest group have postgraduate education, versus 16% of all others.
But it’s not education that gets people into the 1%.
It’s IQ and hard work.
Education produces little more than signaling.
Greg Mankiw makes a case for graduate school education:
Apart from their bank accounts, Gallup finds education to be the greatest difference between the wealthiest 1% of Americans and everyone else. The Gallup analysis reveals that 72% of the wealthiest Americans have a college degree, compared with 31% of those in the lower 99 percentiles. Furthermore, nearly half of those in the wealthiest group have postgraduate education, versus 16% of all others.
But it’s not education that gets people into the 1%.
It’s IQ and hard work.
Education produces little more than signaling.
“Capitalism as it is used in common discourse, refers to a decision making-methodology in it’s narrowest form, and a general bias in it’s broader form, that is used by members of a population that describes a broad spectrum of property definitions from the most several (individual) property, to the most shareholder (collective) forms of property, the entire spectrum of which requires calculable means of planning production, and the transfer between individuals by voluntary means — and which specifically prohibits transfer by involuntary means. This institutional bias, it’s property definitions, the modes of transfer, and the means of dispute resolution, can be represented along a second axis describing a broad spectrum of enforcement mechanisms from the most informal and voluntary, which rely entirely upon the power of ostracization and opportunity deprivation, to the most formal and involuntary, which rely upon a contract called a constitution that enumerates property rights and exceptions, either written and explicit or oral and traditional, and that includes a judiciary that resolves disputes according to those enumerated rights and exceptions no matter how they are encoded.’
X-Axis: Individual ->Shareholder
Y-Axis: Informal -> Formal
(Diagram Attached)
An anarchist might argue that capitalism consists of individual property rights (informal+individual). A classical liberal would argue that capitalism consists of individual property rights that are constitutionally administered (Individual+Formal). A communist would argue that property is entirely shareholder driven and at least according to marx, rules would be unnecessary under communism (Shareholder + informal). A democratic socialist would argue that property is communal, and divided up for purely utilitarian purposes, and that laws and administration are needed (Shareholder + Formal).
All current political philosophies incorporate the notion of property rights, since economic calculation is impossible without them. The current argument is that all individuals in an economy are shareholders (which is hard to refute), and that because they are shareholders they are due dividends. Our ancestors solved this problem by suggesting that freedom was sufficient compensation for shareholders. ‘Input freedom’ or ‘freedom of opportunity’. This means that there are no involuntary transfers allowed.
Property requires institutions because institutions are required to defend property.
The private law society, and it’s progenitor the monarchy, are superior forms of government.
They are perhaps the best form of government ever invented.
Over on Stumbling And Mumbling, Chris Dillow writes about inequality, and refers to OECD Gini-charts on inequality and trust, in an effort to suggest it’s ‘how we believe’ one thing or another that determines redistributive policy. As if conservatives simply need to ‘feel differently’ in order to desire a more egalitarian society.
I try to show him that a tolerance for redistribution is a function of cultural homogeneity, and a lack of threats to the status economy.
Here is most of Chris’ article:
My chart shows that the correlation between big government and equality is weak. Yes, countries with big government spending tend to be more equal, but there’s a lot of variation around this. For example, France and Norway have similar levels of equality, but France spends 13 percentage points more of GDP. And the UK has the same inequality as Australia or Japan, but spends 10 percentage points more of GDP.
In fact, it could be that the positive correlation between equality and public spending doesn’t reflect causality from the latter to the former at all, but rather an omitted variable. Countries that combine big government and equality tend to be high trust societies. It could be, then, that the same high trust that makes people supportive of redistribution – because they believe “welfare scroungers” aren’t ripping them off – also makes them support big government as they trust politicians not to waste money.
This possibility hints at another – that perhaps it’s possible to combine small government and equality if the right cultural or institutional factors are in place. I mean, for example:
– Strong trades unions. These not only raise the pay of the worst off, but also help restrain top pay.
– A collectivist culture. A society that believes that corporate performance depends upon the abilities of all its employees will be more egalitarian than one which believes that organizations can be transformed by star managers.
– Education. A highly educated workforce might be more equal, if only because it creates more competition for top jobs. There is a correlation between education levels (pdf) and equality – the egalitarian Nordics do better than the inegalitarian US and latin Americans. And the causality mightn’t be entirely from inequality to poor education. However, high educational standards are achieved not by increased spending, but by a culture which values schooling – and the UK lacks this.
Herein, I fear, lies the big challenge for the Left. Although it is technically possible to reconcile small government or fiscal conservatism with greater equality, the UK lacks the cultural underpinnings which would permit this happy combination.
Despite the fact that for many of us equality of outcome is not a goal, but freedom, the difference between egalitarian and non egalitarian states is, driven by factors in addition to those you mention:
Education
Status Signals
Access to power, Resistance to Changes In power:
[callout]…small homogenous Protestant countries with high median IQ’s are more distributive than factional, non-protestant countries with lower median IQ’s.[/callout]
d) Size: it is easier for a small homogenous culture to create an environment that tolerates redistribution. This is the reason for the egalitarianism of the nordic countries. They’re small and homogenous and there are few if any external pressures from ‘unlike’ groups with different cultural and therefore status signals and different “property definitions.”
e) Composition: IQ distribution matters. This difference affects the USA, and dramatically effects South America. South america is also highly tribal – as are Brits. The USA is a domestic empire over a set of different cultures consisting of different economic, religious, racial and cultural interests in various compositions, each with different IQ distributions, and this in turn correlates pretty consistently with performance of the groups, which in turn creates competition for status signals, and a desire for access to power in order to expand them, and a counter-desire for people who which to resist that expansion.
A number of these factors run counter to the progressive fantasy about the nature of mankind, and individual behavior in society. And failing to include them in your list, is simply a prescription for failing to accomplish your desired state of ‘equality’, by denying the factors that dramatically affect political preferences in redistribution.
The lesson to take away from any analysis of the tolerance for redistribution of one’s productive gains (‘equality’), is that **Human beings seek status as much or more than money, and that those who have money will redistribute it to the less advantaged if they perceive that they are not undermining their status as individuals, their status as a cultural class, or their status as a system of cultural manners, ethics and morals.**
In other words, if the proletariat has to behave and conform, (which it does in france and doesn’t’ in england or the USA) then people will tolerate redistribution. If the proletariat doesn’t have to behave or conform, then they will resist it.
That’s the difference between seeing people as disadvantaged and lazy and incompetent or threatening and destabilizing.
*Adherence to norms determines the tolerance for egalitarian sentiments. And cultural diversity reduces tolerance for egalitarian sentiments.*
Economists look only at the monetary economy. But the monetary economy is a Maslowian pyramid that exists first to support basic needs, second to provide individuals with the needs for reproduction, and third to provide the needs for status signals – which in turn provides access to mates, and ease of nesting/reproduction. As the economy improves, and the upper classes expand, the status signal economy dominates the monetary economy – ie: the society becomes politicized. The only solution is cultural homogeneity.
In other words, there are opposing curves that describe cultural homogeneity and the tolerance for monetary redistribution, which in effect describes the status signal economy.
THE DECEPTION CREATED BY THE OECD CHARTS
Here are the charts the you’re referring to.
And from these charts, we are expected to deduce that ‘high trust societies’ are the most redistributive.
However, what these charts actually show, is that small homogenous Protestant countries with high median IQ’s are more redistributive than factional, non-protestant countries with lower median IQ’s.
All this means is that PEOPLE ARE MORE REDISTRIBUTIVE WHEN THERE ARE FEWER THREATS TO THEIR WAY OF LIFE.
And Charles’ argument is just another example, of why any economic argument that mentions the nordics is be definition, false.
Curt
A friend posted a humorous advertisement from Columbia, where young women are advocating that ‘natural is better’. Someone asks why this kind of thing happens.
An exacerbated interest in youth and sex is a cyclical expression of human behavior that is usually caused by the intersection of:
(a) the ‘winter’ period of a civilization wherein the institutions that perpetuated the set of forgone opportunity costs we refer to as customs, myths, manners, ethics and morals are insufficient to coordinate status signals in the economy due to a combination of institutional calcification, and
(b) a substantial increase in population causing an over representation of single people of mating age, and
(c) a period of economic prosperity that enables the proletariat access to leisure — usually caused by an increase in technology or shift in trade routes. (Or a decline in the aged population as we saw after the plague as is demonstrated by 13th century french literature.)
The synthetic historians have all discussed this process in one way or another. (Toynbee, Quigley, Durant, Spengler and Braudel.) Strauss and Howe address this somewhat in their books on cyclicality such as ‘Generations’.
The world needs cartoons it seems. In macro economics, these ‘cartoons’ consist of a set of standardized charts the goal of which is to inform policy makers as to the actions required of their monetary policy for the purpose of reducing unemployment by fooling people into spending by using disinformation about their current ‘wealth’. However, like anything else, what you choose to chart either assists or harms in making your case – charts confirm or deny your biases. The current charts used in macro economics reflect the belief that human beings are uniform – at least in the aggregate. Meaning that we’re equal in ability and in our productivity. Which in turn implies a requirement for democratic socialist policies instead of classical liberal policies. This use of aggregates justifies the progressive political presumption. The use of individual statistics on the other hand, justifies freedom, property rights, and all sorts of politically incorrect ‘isms’.
THE IS-LM, and IS-MP CHARTS
Macro economists rely upon these two charts to emphasize either monetary policy and spending for the purpose of creating ‘demand’.
Or monetary policy and spending for the purpose of targeting an interest rate for the purpose of making sure the country isn’t artificially short of cash.
HAYEK’S TRIANGLES
Hayek created charts to show differences in production cycles.
GARRISON’S DIAGRAMS
Roger Garrison created a series of charts to show the intertemporal effect of money and interest – effectively representing the Austrian view graphically.
IS-MP AND THE INTERTEMPORAL MISALLOCATION OF HUMAN CAPITAL
Show how monetary policy, and in fact, all intervention, misallocates human capital.
(UNDONE)
POLITICS
The nolan chart describes the political spectrum. Nolan’s wonderful chart is constructed to construe decision making as a matter of choice between neutral consequences, rather than as a preference between forms of redistributing the gains from trade and exchange – without which there would be nothing to exchange.
KINSELLA’S EVOLUTIONARY CHART
DOOLITTLE’S POLITICAL SPECTRUM CHART
These Axis describe a four sided pyramid with the state on the top. (For the unwashed massess — Axis vs Axes: The plural of axis is “axes”, pronounced ‘AK-SEEZ.)
The Property Economy
X – Axis: State-Monopoly on property VS individual property rights and individual claims on rewards from trade. Libertarian/Commercial/Calculative/Middle Class
Y – Axis: State-Monopoly on gains in production VS Shareholder rights, and shareholder claims on rewards from trade. Progressive/Theological/Rational/Lower Class
The Opportunity Cost Economy
Z – Axis: Formal Institutions: State-Monopoly on behavior (law) VS Voluntary Behavior (religion/philosophy)
Alpha – Axis: Informal Institutions: Opportunity Costs Required (Norms – highly uniform manners, ethics, and morals VS no uniform manners, ethics and morals). Conservative/Military/Legal/Upper Class
(UNDONE: I’ll update this page ater when I get the diagram done.)
TIME PREFERENCE VS POPULATION PREFERENCE IN POLITICAL PREFERENCE, THEN OVERLAY WITH THE HUMAN SENTIMENTS
And then show how time and population preference are gender driven, and class driven.
Then I can show how time preference relates to political preference, and the allocation versus misallocation of human capital..
THREE TYPES OF COERCION AND THE SOCIAL CLASSES
Then show the ‘three types of coercion’ which is implicit in this chart, and universal to the rest of my work.
PER CAPITA GDP AND IQ
Noting the difference between verbal and mathematical.
EDUCATIONAL EFFECTS ON IQCLASS, RACE AND IQGENERATIONAL CYCLES
“I actually think this issue brings up extremely deep philosophical questions that virtually no one I can find wants to engage in.”
What are you talking about?
No one wants to engage in those conversations? You haven’t posted an issue yet that hasn’t been addressed in the past century pretty thoroughly. Or at least, you should engage a few libertarian intellectuals.
I think you mean, that it is impossible to affect the political dialog by framing policy questions by other than political means. There is only ONE political spectrum (progressive to conservative) but there are TWO political AXIS (incorrectly stated by Nolan) consisting of Individual Property Rights (Economic Freedom per Nolan), and Pseudo-Shareholder Appropriation Of Returns (Personal Freedom per Nolan).
***And so you yourself are framing the question falsely.***
Which is why you can’t get serious traction with your arguments (despite being the best blogger on center-progressive political economy).
Now, you’d have to answer your own question here: why is it that a) people don’t frame it the way you prefer, and b) why is it that you frame it the way that you do?
It’s the progressive vision versus the conservative vision. ie: you see the world as a run-rate system that has it’s own momentum that is unstoppable and the fruits of which can be siphoned and shared without consequence. Conservatives view the world as a struggle to concentrate capital resting on a fragile edifice that has been constructed by irrational but successful means, and which can be disassembled and lost without constant vigilance.
Counter-intuitive results are produced on both sides of the aisle. For example, online pornography drastically reduces sex crimes – it seems obvious now, but it didn’t then. Cheap fattening food, cheap music, cheap movies and cheap video games, and easy access to pot give the unwashed proletariat something better to do than alcohol, hard drugs, violence, crime, rebellion and hanging on street corners like they did until fifteen years ago. Increasing incarceration and increasing punishment (especially three strikes) works to reduce crime. Eliminating the permanent welfare dependency decreased dependency. The inter-temporal redistribution system (social security) created a dependency bubble.
The purpose of politics is to win control of the bloody hand of government so that your alliance of minorities can seek rents on the other alliance of minorities instead of working in the market for mutual gain — like we libertarians of the classical liberal bent recommend, by treating society as a portfolio of human capital that must be constantly improved for the benefit of all.
All of us want the benefits of the market without the risks of participating in it. People seek to game the market through political rent seeking, through saving enough to live off their savings and investments, to under-consuming so that they have more leisure time. The market is hard.
An article on slate that says that men are homophobic when watching pornography. In other words, this is another feminist-appealing anti-male rant.
The straight male performer must be attractive enough to serve as a prop, but not so attractive that he becomes the object of desire.
Complete nonsense. It’s all about self image and arousal.
Men need to feel dominance. Men are aroused by feelings of dominance over a woman, for the same biological reason women are attracted to alphas that will dominate them (sexually) without being too threatening. Women have a sort of ‘marginal difference in attraction’ depending upon their degree of ‘alphaness’ in relation to other women. They are aroused by men that fit into the spectrum of ‘alphaness’ that is a comparative advantage without being a threat. Women ‘sort’ men that way. (It’s obvious isn’t it?)
In porn, men don’t sort much. They take almost every single opportunity. In life, men take any opportunity that won’t harm their reputation with other men. Women take only those opportunities that won’t harm their reputation with other women.
So, in pornography, it’s that men are ‘unaroused’ by the presence of a more dominant male who they see as a competitor, and therefore reduces their sense of dominance at that moment.
In pornography, men want a stand-in that they can empathize with where they feel dominant. (Just as they feel by watching sports. This is the side effect of our ability to imitate.) Romantic, patient interludes are a female arousal bias not a male one. In fact, Men need to be taught romantic sexual behavior as a skill. It’s not native to male behavior, which thanks to testosterone is more aggressive, and far less patient.
Women demonstrate their alpha desires too — just in different circumstances. Just as women who run cooking shows ‘can’t be too attractive’ or just as Oprah is a ‘safe’ counsellor to middle class white women. (Yes, those are both facts we have a lot of statistical data to support.)
Its the same for both sexes. We need situational dominance. We need to feel our self image is fulfilling to us in relation to other human beings. It’s about the feeling of dominance (or not) that comes from our self image when imitating through observation.
One commenter Lucas states the problem quite clearly:
“I can’t speak for the rest of the men out there but my personal opinion is that watching a woman have a good time and thoroughly enjoying herself is what attracts me to the porn to begin with and I really don’t care what the dude looks like because I’m not watching the porn because of him I’m watching it because of her”
(This article bothered me. It’s yet another self congratulatory absurdly feminist progressive framing of inter-gender relations that is counter to the facts. Men aren’t afraid of being turned on by homosexuality. They just viscerally react to it they way women react to sex with a dirty naked old man, with open bleeding sores, covered in vomit. It’s not complicated. It’s just gross. )
“The United States is becoming more educated faster than the economy would absorb educated workers.”
Actually, that statement would attribute value to education that is not demonstrated by the numbers in the market. It would just as likely suggest that ‘education’ has lost it’s meaning, and that being ‘educated’ is becoming disconnected from being ‘productive’ where ‘Productive’ is determined by the return on one’s skills in the marketplace. Islamic countries misallocate human capital too — by educating people in “islamic studies”. Just as westerners do by educating people into the vast literature and pseudoscience of the democratic mythos. We are still educating people as if they’re farm workers moving into industrial labor as if it’s 1949, and in college in particular, educating the middle class as if they are entering a world of comparative privilege – and the market is demonstrating the folly of it.
If the absolute number of ‘hard’ degrees has remained constant since 1963, while the percentage of the population with degrees has increased so dramatically, then we cannot have kept pace with technology that increasingly requires hard degrees.
SOLUTION?
The market is smarter than planners, politicians and economists.
ILLUSTRATING THE PROGRESSIVE FAILURE
And this is the second post on Modeled Behavior in three days that illustrates what’s wrong with solving for employment using monetary policy instead of solving for inter-temporal productivity using ALL AVAILABLE POLICY. It assumes that inter-temporal redistribution of money for the purpose of increasing consumption regardless of productive ends has NO EFFECT on future productivity. (Thats the whole problem with Keynesianism isn’t it?) It’s the great progressive failure, It demonstrates the failure of progressive policy. It demonstrates the folly of the progressive hijacking of Keynesian ideas — just as progressives – democratic socialists – have hijacked the world ‘liberal’. (Keynesianism has become synonymous with irrational progressive philosophy despite that it does not have to be.) Progressivism is the philosophy of kicking the can down the road until the entire economy collapses from long term misallocation of human capital. From that perspective the IS-MP approach is even more destructive than IS-LM.
FWIW: I’m not an anarchist, but a neo-classical liberal using Austrian methodology. Austrianism is a methodology of observation using Propertarian analysis. Austrian methods have been adopted by people with libertarian sentiments. Libertarianism is a philosophy that is an outgrowth of Catholic Natural Law, which is an a restatement of greek philosophy, which in turn is the science of ‘observation’ of human behavior. From this standpoint, Keynesianism is UNSCIENTIFIC because it denies the observation of some factors in order to provide confirmation of other factors. The purpose of the entire progressive project is the accumulation of state power using methods that produce consequences that are harmful to the polity over the long term. There is no free lunch. There is no ‘natural momentum’ to innovation in an economy. Consumption also consumes differences in innovation that make consumption possible. You can borrow across time, but it’s either an investment or a loss, and both investments and losses are cumulative.
BTW: There is nothing that can be expressed in mathematics that cannot be expressed in human language. There is quite a bit that can be expressed in human language that cannot be expressed in mathematics. This is because mathematics is a process of maintaining ratios, and language is a process for determining causality.
Curt
The desire of the expanders to expand is always exponential. In the end you only need one of them and they will attempt to take over the entire economy. What’s stops them is competition, scarce real resources and financing.
Thus if you are in a world where no one else is looking to expand, and real resources are slack, financing is all that’s holding one of these folks back.
Practically speaking the price of slack resources also matters because if they actually collapsed in price then at some point you could simply self-finance your empire.
But, there is never a shortage of empire builders. There is only a shortage of people willing to lend to empire builders.
Well, first lets understand that it is entirely possible to saturate all opportunity within any economy unless there is some sort of asymmetry of either resources, information, or technology. The typical keynesian assumption is that we will continue to discover opportunities by the application of technology. And that we can keep doing so forever.
I’ll have to answer that obviously historical falsehood in a later posting.
But the choice sentence elsewhere in the article was this one:
“If people genuinely couldn’t find good ways to employ resources then everyone would get poorer but as long as financing is available there need be no recession.”
That’s the whole point now, isn’t it? Are you sure you understand the implications of that sentence?
I don’t think so.
Whenever one group of people (a) flocks to an opportunity in significant numbers that they deny access to another group of people (b), the group (b) will work against the interests of group (a) in order to gain their own opportunity.
If you view society as a collective consisting of a community of common interests, then perhaps you might favor your progressive bias. However, if you see society as consisting of groups engaged in perpetual and unrelenting class and cultural warfare over the distribution and means of obtaining status and opportunity — where each group uses the state to apply coercion against other sects, then one would develop an entirely different conclusion. Furthermore, if you view yourself as a minority competing with foreign groups, then you would increase your bias in favor group persistence. And from that position, you would see people who ally with the state as your competitors, not members of your community.
You (Keynesians) assume the state is a benefit, and apply a methodology that confirms that the state is a benefit, because it serves to confirm your bias. But that benefit is working AGAINST as many preferences as it is in FAVOR of it. Because we have no community of common interest.
There is no community of common interest in an empire. The meaning of empire is precisely that people do not share common interests. Small homogenous states are egalitarian because of the status economy – which determines access to mates, people, and opportunity. The status economy is also the natural accounting system of many.
People value money and culture, morals,ethics and manners, (that set of forgone opportunity costs we all pay in each moment of our day) as well as different
I don’t think you grasp the importance of the fact that almost all decisions consist of far more than prices. In fact, at any given point, market prices are only one factor in any transaction. People actively seek circumstances where they can avoid price consideration – either to demonstrate their status, or to gain human attention, or to simply avoid existing in the monetary economy. In complex decisions, all sorts of different biases are ‘funded’ by choices between one provider of goods and another whenever prices are not marginally different. Assuming all prices are equal for a particular good or service, people generally do business with those people with whom they can exchange status signals, or options on future discounts due to loyalty.
It’s not that you’re mistaken in your understanding of the monetary models, or the benefit of monetary policy. It’s that you’re not accounting for the friction in that model that is determined by the signaling economy.
And that friction can approach the infinite whenever you do not have a homogenous society. And if you have a homogenous society, you then need a common currency. Because a currency is the means of shared investment, risk and reward among a people with a set of common interests.
(Homogenous: meaning the shared mythology, the shared methods of signaling within the methodology, the shared definitions of property, the shared methods of paying for the informal institutions that perpetuate those property definitions: manners, ethics, and morals, the shared institutions for resolving conflicts over the transfer of property, and the shared institutions for concentrating and applying capital toward shared ends. All of which is bounded by the complexity of the division of labor in in turn which is determined by the percentage of the population with an of IQ over 105.)
🙂
Curt
