Eugenic influences on American economic reform during the Progressive era

I’m reading a paper due to be presented in a seminar tomorrow, bearing this title. The author is Tim Leonard, of Princeton University. Etiquette forbids, of course, more than cursory quotation of this paper, but this sort of thing is clearly his bag. In fact I believe that what I have is a companion (or follow-on) piece to this paper, in the Journal of Economic Perspectives.

I treat you (from the latest publication):

… a crude eugenic sorting of groups into deserving and undeserving classes crucially informed the labor and immigration reform that is the hallmark of the Progressive Era (Leonard, 2003). Reform-minded economists of the Progressive Era defended exclusionary labor and immigration legislation on grounds that the labor force should be rid of unfit workers, whom they labeled “parasites,” “the unemployable,” “low-wage races” and the “industrial residuum.” Removing the unfit, went the argument, would uplift superior, deserving workers.

He has also taught me a thing or two about the likes of John Gibson (besides, obviously, that they’re racist twats):

It was a scholarly fashion, circa 1890, to declare the U.S. frontier “closed” and to sound a Malthusian alarm about excess American population growth. But the professional economists who wrote on immigration increasingly emphasized not
the quantity of immigrants, but their quality. “If we could leave out of account the question of race and eugenics,” Irving Fisher (1921, pp. 226 –227) said in his presidential address to the Eugenics Research Association, “I should, as an econo-
mist, be inclined to the view that unrestricted immigration . . . is economically advantageous to the country as a whole . . . .” But, cautioned Fisher, “the core of the problem of immigration is . . . one of race and eugenics,” the problem of the
Anglo-Saxon racial stock being overwhelmed by racially inferior “defectives, delinquents and dependents.”

Fear and dislike of immigrants certainly were not new in the Progressive Era. But leading professional economists were among the first to provide scientific respectability for immigration restriction on racial grounds. They justified race-based immigration restriction as a remedy for “race suicide,” a Progressive Era term for the process by which racially superior stock (“natives”) is outbred by a more prolific, but racially inferior stock (immigrants). The term “race suicide” is often attributed to Edward A. Ross (1901a, p. 88), who believed that “the higher race quietly and unmurmuringly eliminates itself rather than endure individually the bitter competition it has failed to ward off by collective action.” Ross was no outlier. He was a founding member of the American Economic Association, a pioneering sociologist and a leading public intellectual who boasted that his books sold in the hundreds of thousands.

Ross’s coinage gained enough currency to be used by Theodore Roosevelt (1907, p. 550), who called race suicide the “greatest problem of civilization,” and regularly returned to the theme of “the elimination instead of the survival of the fittest.” In that same year, more than 40 years after the American Civil War, Ross (1907, p. 715) wrote: “The theory that races are virtually equal in capacity leads to such monumental follies as lining the valleys of the South with the bones of half a million picked whites in order to improve the conditions of four million unpicked blacks.”

What a wonderful concept – something that I can clearly see having as much currency as ever, even while the ordinary Malthusianism of population control has just wandered off to the Sierra Club types.

The seminar ought to be very enjoyable. I’m a big fan of picking through the effects of standard Graham Greene characters (the harm one can do with good intentions always impresses me). Grab some of his papers that are available and read them over your breakfast, or lunch, or whatever. Beats talking about baseball, or football, or whatever elses masquerades as a sport, ’round here.

Economics, not apathy, exposes chemical plants to danger

We’ve come across similar things here, with respect to nuclear power plants. It makes little to no sense for such things to be managed by the market, but I’ve yet to see any evidence that I should trust our governments, given their records in such affairs (hint: terrible, as that linked-to-post discusses at length). Chemical plants are not dealt with much more competently.

Over in Wired magazine’s Security Matters section, it is the chemical plants being given consideration.

Toxins such as ammonia, chlorine, propane and flammable mixtures are constantly being produced or stored in the United States as a result of legitimate industrial processes. Chlorine gas is particularly toxic; in addition to bombing a plant, someone could hijack a chlorine truck or blow up a railcar. Phosgene is even more dangerous. According to the Environmental Protection Agency, there are 7,728 chemical plants in the United States where an act of sabotage — or an accident — could threaten more than 1,000 people. Of those, 106 facilities could threaten more than a million people.

The problem of securing chemical plants against terrorism — or even accidents — is actually simple once you understand the underlying economics. Normally, we leave the security of something up to its owner. The basic idea is that the owner of each chemical plant 1) best understands the risks, and 2) is the one who loses out if security fails. Any outsider — i.e., regulatory agency — is just going to get it wrong. It’s the basic free-market argument, and in most instances it makes a lot of sense.

…

We taxpayers pay for airport security, and not the airlines, because the overall effects of a terrorist attack against an airline are far greater than their effects to the particular airline targeted. We pay for port security because the effects of bringing a large weapon into the country are far greater than the concerns of the port’s owners. And we should pay for chemical plant, train and truck security for exactly the same reasons.

In effect there is no chance of a market solution. We’ve also seen Ronald Coase pop up a lot, here: the idea being that, yes, crappy corner-cutting by owners of nuclear and chemical plants put us all (either directly or, via the environmental consequences, indirectly) at risk. However.

So there’s a market for securing a chemical or nuclear plant. Consumers, producers, and an equilibrium level of security, bought at an equilibrium price. For the market to work, the two sets of people affected have to form the demand – either directly, or via a Coasean after-market (it doesn’t matter). The owner of the plant – easy. The rest of us? Not so easy. How much do you know about securing a chemcial or nuclear plant against entropy or exogenous attack? Because I know bugger-all. Not nearly enough to go working out how to negotiate purchasing extra security either with or from the plant’s owner.

That’s the whole problem (this is similar to why market solutions for health care are daft – unless we’re all trained Medical Doctors as well as patients, it just won’t work: we just don’t have the information required to participate effectively). It brings us, of course, back to the old politics vs. government problem. We need government to handle this/these things for us. That’s why we invented it. Trouble is, we don’t have it.

I don’t know what we have. We have politics, we have debates over John Edwards’ haircuts, how black Barack Obama is and the truly asinine discussion of whether Giuliani spent time at ground zero (less than he spent at Yankees games, if you’re interested – but I refuse to believe you’re surprised), but we don’t have government.

Appreciating inflation

Get it? Get it? Sigh.

Inflation continues to be discussed. Particularly the fact that the Fed continues to use this ‘core’ deal – smooth at around 2.8% – while the rest of us wonder why everything we buy is so much more than only 2.8% more expensive. In the case of our retirees, they will also have to ponder what to do with incomes increasing by only 2.3%. Remember Newsweek’s article?

In the first eight months of 2007, the consumer price index—the main gauge of inflation—rose at a 3.7 percent annual rate. That’s more than 50 percent higher than the mild 2.3 percent core rate. The prices of energy and food are soaring, at 12.7 percent and 5.6 percent annual rates, respectively, and have been doing so for years. As a result, the CPI—including food and energy—has risen 12.6 percent since July 2003, for a compound rate of about 3 percent.

There are no end of reasons for this nonsense – such as not having to shell for big increases in social security! Well, in a country whose median incomes just haven’t budged, we can at least say GDP – overall wealth – is advancing.

Two things: first, if GDP is advancing but median incomes aren’t, the government has still done a bad job – by anybody’s measures. Second, you’ll notice I’m using 1992 as the base year, rather than things like 1990 or 2000. Let’s just say I find analysis that covers two Presidential tenures amusing.

Now, suppose I wandered over to something like inflationdata.com and pulled out gasoline prices and corn prices – i.e. the fuel and food that core inflation ignores.

Using a price index based upon gasoline:

Using a price index based upon corn (caveat: I’m not all that happy about this series, but I couldn’t secure – without paying – good commodities market prices. Anyone have them?):

We can immediately see the benefit of using core inflation – fuel and food prices are volatile, and including them (or, in this extreme case, using them exclusively) makes real GDP (i.e. increases in wealth after taking away increases in the cost of living) equally volatile.

One thing they do exhibit, though, clearly, is appreciation. They go up and down, cyclically or seasonally, but they clearly trend upwards. Moreover, they leave real GDP in a very bad way by the end of the series.

In fact, return to what I’ve helpfully labelled (for a change) Figure 1: nominal GDP (that is, GDP in the dollar terms for each year) is increasing, on average, by 5.16% over the 15-year period. Ergo inflation needs to be under that 5.16% p.a. in order for real GDP to be increasing. Since the early 00’s at least, the achievement of this has been through the use of core inflation rather than, say actual inflation (the Big Picture has handily taken to calling core inflation inflation ex-inflation).

If we added in those fuel (12.7% inflation) and food (5.6% inflation) factors, real GDP – wealth – would not have increased at all in quite a few years. Just like median incomes. Given the sliding dollar and the ever-more-rapidly appreciating such costs of living. Based on Figures 2 and 3, I would say that, in real terms (I mean, real real terms) the wealth of the United States has actually fallen since 2000. Blame the tech-stock-burst, blame 9/11, blame whatever or whomever you like – but it’s this government (and I mean government – both parties, their aides, all the way down to staff writers at newspapers, still trying to figure out why they feel so confused) that’s trying to keep that fact from being known.

I never like Paulson, anyway

His ramblings about the strength of the US economy shit me. So – although I’m late to this story – I was pleased no end by Slate’s look into his Jim-Cramer-like responsiveness to all this Sub-prime stuff (originally spotted over at the Big Picture, I should also disclose):

… it makes you wonder whether he’s been watching birds for the past year instead of reading the headlines on his Bloomberg machine. For these measures are a little like distributing condoms at a clinic for teenage moms who are six months pregnant—good prophylactic ideas that arrived a half-year too late. Last year was a boom year for foreclosures, up 42 percent from 2005. And foreclosures have spiked sharply throughout 2007, up more than 55 percent in the first half of 2007; September 2007 foreclosures nearly doubled from September 2006. Rising homeownership rates, a success story routinely highlighted by the Bush administration, have fallen for the last three quarters.

Even as hundreds of thousands of people saw their homes dispossessed (some of them were probably speculators who may have simply walked away from no-money-down mortgages), the problem was essentially invisible to Paulson. Of course, it’s doubtful Paulson knows many subprime borrowers or subprime lenders. On the other hand, the former head of Goldman Sachs is a member in good standing of the club of Wall Street CEOs. When the subprime meltdown began to disturb the CEOs’ sleep, he responded with alacrity. Even as he had harsh words for the entire mortgage complex—from brokers to credit-rating agencies—and recommended far-reaching reforms, Paulson was careful to single out one class of actors for protection. He noted that the issue has been raised as to “whether greater liability should be imposed on securitizers and investors.” In other words, should the Wall Street firms that peddled mortgage-backed securities that turned out to be worthless a few months later be subject to greater accountability through the legal system? His answer: “In my view, this is not the answer to the problem.”

Check out the article, if you have a few minutes.

FLCL

I suspect this blog requires an AWESOME! tag. I am more a fan of the FLCL books, than anime, however:

Yes, every episode concatenated. Originally found over at the hard-to-imagine-possibly-being-more-rewarding-as-it-was website of Warren Ellis.

The joy of Google Video, as opposed to Youtube (or, that which makes it more evil) is that you can download .mp4’s of the files. I’m suggesting you don’t, of course, because stealing is wrong. I’m just saying that you can.

UPDATE: While I think of it. Don’t forget the wonders of stage6.com. You can also watch every episode in DivX (far superior to Youtube). The sound is better, too (definitely a factor with the music of The Pillows).

Start saving up for the future health care burden of the un-SCHIP’ped

Or, rather, the non-SCHIP’ped.

House Democrats were unable Thursday to override President Bush’s veto of their pre-election year effort to expand a popular government health insurance program to cover 10 million children.

The bill had bipartisan support but the 273-156 roll call was 13 votes short of the two-thirds that majority supporters needed to enact the bill into law over Bush’s objections. The bill had passed the Senate with a veto-proof margin.

The expansion by another 4 million young people of the State Children’s Health Insurance Programme (SCHIP) fails. Implications? First, 30-40 years from now, the US health care system (such as, or however, it will exist) will be treating these people as much sicker – and more expensive – adults.

In the case of health, an ounce of prevention most certainly is, generally, worth a pound of cure. The human is more or less able to accumulate health and maintain a given stock of health. But. There is a social gradient to this. Poor people don’t tend to nourish their children as well. They have less income, live in worse areas, they tend to smoke and drink more. They eat and feed their kids high-caloric, low-nutrient diets. Those kids don’t develop as well. Those kids, packed with sodium and high-fructose corn syrup, won’t benefit as much from education (of any standard) – they won’t turn into adults that are efficient at building and maintaining health, they won’t earn as much, etc. It’s not called a ‘trap’ for no good reason.

So to SCHIP. It has been opposed on the grounds of the ideology of welfare, but that was just plain asinine. SCHIP was intelligent not because it expanded socialised medicine, or because market-based solutions for health care are inefficient, wasteful and fraught with terrible distributional outcomes. SCHIP was intelligent because for relatively little money now the government could have (a) saved a lot of money by not having to sort these people out once they’re (more likely to be) poor, sick adults, and (b) ensured greater economic growth through the increase in human capital and social capital that would have resulted from increased health status.

Not for nothing does the US have such terrible health status. The US government, unlike those of the rest of the OECD, does not pursue health. We’re so caught up in the debate about universal health care (or insurance) that we miss the actual difference. The US government (or the politicians posing thereas) does not pursue health for the American people. If it did it would invest in SCHIP, invest in school lunches, invest in sports programmes, ban shitty advertising of crap food to children. It would have a No Child Left Behind policy that made some goddamn sense.

The rest of us employ broader bases of/for socialised medicine as part of a greater pursuit: equality of opportunity to reach this basic health-producing/maintaining level of health in our citizens. Make them healthy enough that their bodies can basically take care of themselves until they get cancer and need our primary care sectors again.

Here, not so much. Here, we use emergency rooms for basic care – or for emergency care that could easily have been avoided with some relatively inexpensive preventive health interventions by the state. SCHIP would have done that – it already does that, for Cliff’s sake. It only makes sense to save more money by doing it for more people.

The whole affair just angers me, as a health economist (the more so, as a welfarist one).

The second issue was, of course, that which likely contributed to bringing it down:

To pay for the increase, the bill would have raised the federal tax on cigarettes from 39 cents to $1.00 a pack.

“This is not about an issue. It’s about a value,” House Speaker Nancy Pelosi, D-Calif., said just before the vote. “For the cost of less than 40 days in Iraq, we can provide SCHIP coverage for 10 million children for one year.”

I had to make this point to an audience last night. Our countries don’t pay for our socialised medicine by taxing people to hell and back. We do it by not letting our government waste our money on nonsense we don’t want (to as great a degree, shall we say). Governments exist because we invented them. We invented them to do things that we could not, efficiently, do. That includes health care and providing incentives to certain sections of the population to engage in healthy behaviours with positive externalities for the rest of us.

Expanding SCHIP should not be done via increasing the burden of government (certainly not in this country, where each level of government acts without any due regard for the overall burden of all three levels of government on taxpayers). It should be done by making our government a government once again – a body of elected representatives (not leaders. Not politicians) who provide administration for our chosen allocation (and, in the case of SCHIP, investment) of resources.

Like Hillary Clinton’s old shot at universal health insurance, this was done, foolishly, in a manner that just invited opposition. Pelosi should not have been saying this “just before the vote” – it should be the catch-cry of all such legislation. The democrats should trot Ben Cohen out onto the floor of both houses with a box full of Oreo cookies.

The last thing the US government needs is more of our money. What it needs to do (or, what we need to start re-learning how to make it do) is spend it on the things for which we hired this government in the first place.

Opinions differ, of course.