Walker

Walker joined Difficult Run as an editor in August 2013. He graduated from the University of North Texas with an MBA in Strategic Management and a BBA in Organizational Behavior and Human Resource Management. He's currently a grad student in Government at Johns Hopkins University. He has been published in SquareTwo, BYU Studies Quarterly, Dialogue, Graziadio Business Review, and Economic Affairs. He also contributed to Julie Smith's (ed.) 'As Iron Sharpens Iron: Listening to the Various Voices of Scripture'. His other online writing can be found at Worlds Without End and Times & Seasons. He lives in Denton, Texas, with his wife.

The Capitalist Cure for Terrorism

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As the U.S. moves into a new theater of the war on terror, it will miss its best chance to beat back Islamic State and other radical groups in the Middle East if it doesn’t deploy a crucial but little-used weapon: an aggressive agenda for economic empowerment. Right now, all we hear about are airstrikes and military maneuvers—which is to be expected when facing down thugs bent on mayhem and destruction.

But if the goal is not only to degrade what President Barack Obama rightly calls Islamic State’s “network of death” but to make it impossible for radical leaders to recruit terrorists in the first place, the West must learn a simple lesson: Economic hope is the only way to win the battle for the constituencies on which terrorist groups feed.

So begins Hernando de Soto’s WSJ piece on economic freedom as a way to combat terrorism. He tells the fascinating story of his home country Peru and how it defeated the terrorist group Shining Path through a “new, more accessible legal framework in which to run businesses, make contracts and borrow—spurring an unprecedented rise in living standards.”

Worth the read.

Inequality in Non-Cognitive Traits

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A recent publication by the Chicago Fed looks at skill gaps in numeracy, literacy, problem-solving, and non-cognitive skills and their relation to income mobility. Perhaps surprisingly (perhaps not), the author found

that inequality in an index of “non-cognitive skills” explains as much or more of the variation in intergenerational mobility than inequality in traditional measures of cognitive skills such as numeracy, literacy, and problem solving. An emerging line of research has argued that personality traits such as perseverance and grit play an important role in socioeconomic success. These results are consistent with the idea that the large gaps in skills in the U.S. population are part of what is driving both higher inequality and lower intergenerational mobility.

Check it out.

Household Demographics

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I’ve relied on economist Mark Perry before regarding inequality and demographics. Not much has changed since last year. As Perry summarizes,

Specifically, high-income households have a greater average number of income-earners than households in lower-income quintiles, and individuals in high income households are far more likely than individuals in low-income households to be well-educated, married, working full-time, and in their prime earning years. In contrast, individuals in lower-income households are far more likely than their counterparts in higher-income households to be less-educated, working part-time, either very young (under 35 years) or very old (over 65 years), and living in single-parent households.

The good news is that the key demographic factors that explain differences in household income are not fixed over our lifetimes and are largely under our control (e.g. staying in school and graduating, getting and staying married, etc.), which means that individuals and households are not destined to remain in a single income quintile forever. Fortunately, studies that track people over time indicate that individuals and households move up and down the income quintiles over their lifetimes, as the key demographic variables highlighted above change…

See Perry’s post for a more in-depth look at the numbers.

 

McCloskey on Piketty

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Earlier this year, The Spectator ran a great article contrasting the worldviews of French economist Thomas Piketty and Chicago-style economist Deirdre McCloskey. “Piketty (for those who have not followed the story so far) worries about capital and, in particular, the tendency for those who already have it to get more,” the article proclaims. “…McCloskey, by contrast, has long argued that economists are far too preoccupied by capital and saving…Th[e] jump in incomes [in the 19th century] came about not through thrift, she says, but through a shift to liberal bourgeois values that put an emphasis on the business of innovation. In place of capitalism, she talks of ‘market-tested innovation and supply’ as the active ingredient of our economic system. It is incidentally a system ‘drenched’ in values and ethics overlooked by economists.” And it is this that gets to the heart of the matter: “whether capital — past accumulation of savings — gets to devour the future, or whether the future is created afresh by each generation. This argument is a struggle between those who think riches are created from riches, and those who think riches are created from rags. Are big profits best viewed as a generous return on capital, in the way that worries Piketty? Or as coming from innovation that ultimately benefits us all?”

Well, McCloskey now has a full response to Piketty’s Capital in the Twenty-First Century forthcoming in the Erasmus Journal of Philosophy and Economics and available on her website. The title? “Measured, Unmeasured, Mismeasured, and Unjustified Pessimism: A Review Essay of Thomas Piketty’s Capital in the Twenty-First Century.” From demonstrating Piketty’s misunderstanding of supply and demand curves (“He is in short not qualified to sneer at self-regulated markets…because he has no idea how they work”) to noting the strange obsession with inequality (“…and [apparently] we care ethically only about the Gini coefficient, not the condition of the working class”), McCloskey does a fine job in her 50 pages painting a very different picture of the world. However, my favorite portion has to be the following:

Righteous, if inexpensive, indignation inspired by survivor’s guilt about alleged “victims” of something called “capitalism,” and envious anger at the silly consumption by the rich, do not invariably yield betterment for the poor. Remarks such as “there are still poor people” or “some people have more power than others,” though claiming the moral high-ground for the speaker, are not deep or clever. Repeating them, or nodding wisely at their repetition, or buying Piketty’s book to display on your coffee table, does not make you a good person. You are a good person if you actually help the poor. Open a business. Arrange mortgages that poor people can afford. Invent a new battery. Vote for better schools. Adopt a Pakistani orphan. Volunteer to feed people at Grace Church on Saturday mornings. Argue for a minimum income and against a minimum wage. The offering of faux, counterproductive policies that in their actual effects reduce opportunities for employment, or the making of indignant declarations to your husband after finishing the Sunday New York Times Magazine, does not actually help the poor (pg. 34).

What she said.

The Slow Hunch: Another Recap

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Once again, I have let all three readers of my blog The Slow Hunch down. Instead of providing links here on Difficult Run to new blog posts each time I write one, I’ve let them build up over the past couple months. To add a little salt to the wound, letting them pile up has made realize that I still don’t post all that much despite my supposedly new commitment to do so.

But I digress. Here is yet another recap of my past few posts at The Slow Hunch:

  • “The Edinburgh Review, 1854: “All Is ‘Of the Earth, Earthy'”” – Looks at an April 1854 report in The Edinburgh Review examining Mormonism in Utah, which emphasizes the overlap of the sacred and the “earthy” among the Mormons.
  • “The Union Review, 1868: “Labour, In Fact, Is Their Religion”” – Relies on another non-Mormon account–this time from a book review in an 1868 volume of The Union Review–that comments on the religious nature of the Utah Mormons’ industriousness.
  • “Thomas Carlyle and the “Perennial Nobleness” of Work” – Scottish essayist Thomas Carlyle’s “Draft Essay on the Mormons” praised the leadership of Brigham Young (though not by name) and the practical, action-oriented belief system of the Mormons. Carlyle’s well-known “gospel of work” in also briefly examined in various letters and writings. 
  • “The Human Economy” – Discusses the shift from an industrial (hired hands) to a knowledge (hired heads) to an eventual human (hired hearts) economy. Managers are beginning to pay attention to the “soft skills” of those they hire.
  • “Resolving Conflict” – Features a TEDX talk from author Jim Ferrell of the Arbinger Institute on resolving conflict at home, work, and abroad.

Stop on by.

President Obama and Immigration

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I’ve blogged before about the benefits of immigration reform and (more) open borders. I also think our path to citizenship is a mess. So, my initial reaction to the President’s announcement regarding immigration was mixed. Peter Suderman at Reason has a pretty balanced take on why my reactions were mixed. In response to the claims that President Obama’s actions are “unprecedented and illegal,” Suderman notes the following:

1. Probably legal: “As Reason’s Shikha Dalmia and Case Western Reserve University Law Professor Jonathan Adler have noted, the president has a great deal of authority to set enforcement priorities and exercise discretion when it comes to immigration law. Even some of the loudest critics of Obama’s action have come around to the idea that, at least technically, it would not exceed the president’s discretionary power, even if it would constitute an unusual and strained use of it.”

2. It is unprecedented: “The administration and some of its supporters are arguing that various presidents, including Republicans, have taken comparable steps before, limiting deportations through executive order, and that makes this well within political norms. This argument leaves out crucial details about congressional involvement and support for those previous presidential orders.” These crucial details have been well-documented by David Frum at The Atlantic.

3. It is a further expansion of executive power and the norms around using it: “Just because an executive action is technically legal does not mean that it falls within legal norms, and executive power can be expanded not only through explicit assertions of previously off-limits authority, but by making use of powers that existed but were never used, or never used to such an extent…Anyone who worries about executive overreach, even those supportive of expanded immigration, ought to be wary of the precedent this move, and the thin line of reasoning behind it, could set.” Expanding the power of one man should be troubling.

4. Executive action may be preferable to reform bill: “If you favor making immigration easier and more straightforward, and think that draconian enforcement efforts are both wasteful and counterproductive, then there are real upsides to executive action when compared to a big congressional overhaul.” Increased border control funding and an “incredibly invasive form of workplace nannying which would create huge hassles for workers and employers, as well as large numbers of false positives—making hiring, and finding employment, an even harder process than it already is.”

5. Executive action could poison broader, more stable reform: “There’s no question that the immediate political consequence would be to further outrage Republicans, and turn a party that has long had a mix of views about the virtues of expanding immigration into one dominated by opposition…But the backlash might not just be the immediate consequence, and it might not just be limited to the congressional GOP and its core supporters; unilateral action might result in a deepened long-term opposition to greater immigration as well.” I highly doubt this has anything to do with the morality of immigration. It is likely nothing more than a political move meant “to provoke Republicans into a frothing rage, in hopes that they will do something politically stupid as a result. (They might oblige.)”

Suderman concludes with caution:

This is not to simply condemn Obama’s plan, but instead to warn enthusiastic supporters that the choice to act at this time, in this way, without legislative backing or public support, might be satisfying in the moment, but also stands a real chance of closing off opportunities for a better, more lasting solution at some point in the future. Consensus is hard, and sometimes it seems impossible, but in politics, it’s also important.

President Eyring at the Vatican

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President Henry B. Eyring–LDS apostle and First Counselor in the First Presidency–participated in The Complementarity of Man and Woman: An International Interreligious Colloquium at Vatican City on Nov. 18, 2014. His presentation was entitled “To Become as One.” The video is below.

Julie Smith at Times & Seasons had an excellent insight about the following quote from President Eyring:

Her capacity to nurture others grew in me as we became one. My capacity to plan, direct, and lead in our family grew in her as we became united in marriage. I realize now that we grew together into one—slowly lifting and shaping each other, year by year. As we absorbed strength from each other, it did not diminish our personal gifts.

Smith notes,

What I hear him saying is that men and women come to marriage with a different set of roles/characteristics,[ref]For a social scientific view of these different set of characteristics, see Steven Pinker, The Blank Slate: The Modern Denial of Human Nature (New York: Penguin Books, 2002) and Gender and Parenthood: Biological and Social Scientific Perspectives, ed. W. Bradford Wilcox, Kathleen Kovner Kline (New York: Columbia University Press, 2013).[/ref]  but one goal of marriage is for them to teach each other and to adopt each other’s roles. I sometimes hear in LDS venues a rather opposite idea–one I find theologically problematic inasmuch as it suggests that men and women should maintain separate characteristics, something I find incompatible with both the idea of the perfection of Christ and his ability to serve as an example for all both men and women, as well as the idea of men and women striving to themselves become perfected. His thinking here can be a great bridge from older teachings about gender difference to a newer vision where those differences can still be acknowledged but won’t be seen as limiting. I especially like his idea that, as he took on nurturing and his wife took on leading, it didn’t diminish either of them. (Contra language we sometimes hear bemoaning the loss of femininity and masculinity.)[ref]A fairly popular post by evangelical blogger Rachel Held Evans makes similar observations.[/ref]

Smith’s observation reminds me of a point made by Texas A&M professor and fellow Latter-day Saint Valerie M. Hudson regarding the telos (“end,” “purpose,” “goal”) of marriage:

What we [Mormons] understand from our doctrine is that the telos of marriage is to ground every human family in real, lived, embodied gender equality.  And then, as a consequence, all reproduction would occur only within that context of gender equality.  If the ideal were lived, then every son and daughter of God would be born into a family that lived gender equality, and thus each would learn how to form such a relationship when they themselves came of age.  Reproduction is the fruit, not the root, of what God intended in establishing marriage. 

That is why it doesn’t matter who’s fertile, and whether a marriage of infertile people is a marriage is beside the point.  The test of whether you have a marriage or not is whether it is gender-equal monogamy.

For Hudson, companionate heterosexual monogamous marriage is a matter of gender equality and human peace incarnate.[ref]See her Sex & World Peace (New York: Columbia University Press, 2012).[/ref] I think President Eyring’s talk could lead to exciting new ways of discussing gender in the LDS Church.

New AEI Study on Family Structure

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A brand new study from the American Enterprise Institute (authored by sociologist W. Bradford Wilcox and economist Robert Lerman) looks at the impact of family structure. Its key findings:

  1. The retreat from marriage—a retreat that has been concentrated among lower-income Americans—plays a key role in the changing economic fortunes of American family life. We estimate that the growth in median income of families with children would be 44 percent higher if the United States enjoyed 1980 levels of married parenthood today. Further, at least 32 percent of the growth in family-income inequality since 1979 among families with children and 37 percent of the decline in men’s employment rates during that time can be linked to the decreasing number of Americans who form and maintain stable, married families.
  2. Growing up with both parents (in an intact family) is strongly associated with more education, work, and income among today’s young men and women. Young men and women from intact families enjoy an annual “intact-family premium” that amounts to $6,500 and $4,700, respectively, over the incomes of their peers from single-parent families.
  3. Men obtain a substantial “marriage premium” and women bear no marriage penalty in their individual incomes, and both men and women enjoy substantially higher family incomes, compared to peers with otherwise similar characteristics. For instance, men enjoy a marriage premium of at least $15,900 per year in their individual income compared to their single peers.
  4. These two trends reinforce each other. Growing up with both parents increases your odds of becoming highly educated, which in turn leads to higher odds of being married as an adult. Both the added education and marriage result in higher income levels. Indeed, men and women who were raised with both parents present and then go on to marry enjoy an especially high income as adults. Men and women who are currently married and were raised in an intact family enjoy an annual “family premium” in their household income that exceeds that of their unmarried peers who were raised in nonintact families by at least $42,000.
  5. The advantages of growing up in an intact family and being married extend across the population. They apply about as much to blacks and Hispanics as they do to whites. For instance, black men enjoy a marriage premium of at least $12,500 in their individual income compared to their single peers. The advantages also apply, for the most part, to men and women who are less educated. For instance, men with a high-school degree or less enjoy a marriage premium of at least $17,000 compared to their single peers.

These findings (among others) led Larry Kudlow to write elsewhere, “While restoring economic growth may be the great challenge of our time, this goal will never be realized until we restore marriage. In short, marriage is pro-growth. We can’t do without it.”

Check it out.

 

New Brookings Essay Series

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The Brookings Institution has an essay series on character and opportunity. As the site describes it,

This essay collection contains contributions from leading scholars in the fields of economics, psychology, social science, and philosophy. It provides a kaleidoscope of views on the issues raised by a policy focus on the formation of character, and its relationship to questions of opportunity. Can ‘performance’ character be separated from ‘moral’ character? Should we seek to promote character strengths? If so, how?

Definitely worth checking out.

New NBER Study on Minimum Wage

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On the heels of Nathaniel’s latest minimum wage post, I thought I’d point to a brand new NBER working paper titled “More Recent Evidence on the Effects of Minimum Wages in the United States.” As one summary explains,

For years, [David] Neumark has battled claims by other economists, such as University of Massachusetts professor Arindrajit Dube, that minimum wage hikes have no effect on employment. This latest paper offers more evidence that employment prospects for teenagers are diminished most by the minimum wage. 

Even though teenagers are generally not relying on minimum wage income for living expenses, jobs give teenagers their first opportunity for work experience that is crucial for becoming a productive worker later in life. For disadvantaged teenagers, a minimum wage job can develop skills that provide an opportunity to move out of the lower-class.

While state and local minimum wage increases deprive some of jobs, even more young people would be out of work if the federal government increased the minimum wage nationwide. Income levels and cost of living vary widely between states. The hourly median wage varies from a high of $37.59 in Los Alamos County, New Mexico, to a low of $10.81 in Brownsville-Harlingen, Texas. The federal minimum wage is an attempt to impose an oversimplified, cure-all prescription to the complex and diverse causes of poverty.

…Neumark’s new paper shows once again that flashy sound bites such as “Raise the Wage” make for quick political slogans, but raising the minimum wage will continue to price teens out of jobs.

The minimum wage, like other price controls, has unintended consequences.