Monday, January 31, 2011

Income Inequality and “The Spirit Level”

The issue of income inequality is a hot topic. Stories are appearing everywhere, with arguments and counterarguments being thrown around, as people try to decide whether the issue is a red herring or a harbinger of revolutions to come. The Economist provided this graphic to illustrate the concern.

The Gini coefficient is a recognized measure of income inequality with the higher the numbers indicating that more income is collected at the higher levels. Zero would indicate a uniform distribution. Inequality is rising in the countries indicated. Of particular interest is the fact that it is increasing significantly in China and India. There is certainly a story to be told there, but I am sure it is not a simple one. One might suspect that each country is a unique case with its own set of unique conditions.

The most interesting contribution to the debate, although perhaps not ultimately the most enlightening, comes from Richard G. Wilkinson and Kate Pickett who published a book in 2009 titled The Spirit Level: Why More Equal Societies Almost Always Do Better. These authors attempt to come up with a grand theory which seems to couple most of the ills of society to the existence of significant income inequality, or perhaps just inequality in general. Presumably inequality generates a physical stress with deleterious health effects. The book apparently caused a stir in the UK when it was published. It is not readily available in the USA. The reception to their thesis seems to depend on political viewpoint as much as anything. Liberals seem to love the notion. Unfortunately, social scientists have been active in attacking the data sets and methods used, as well as the conclusions.

Consider one of the charts used to make their case. This one involves infant mortality rates by country plotted against a measure of income inequality.

If one glances quickly at the chart one sees a definite correlation between higher income inequality and higher infant mortality. However, if one looks closely there are some significant outliers. Consider Singapore and the USA. They define the low and high points of infant mortality, but they are also the two highest points in terms of income inequality. These two countries clearly fall out of the authors’ grand synthesis. Presumably, the results can be explained by the difference in health care systems operative in the two countries and have nothing directly to do with income inequality. One could make the same healthcare system argument to explain the Japan and USA results. One begins to suspect that each point on that curve has its own national narrative that brings in complicating factors. If one looks at the charts the authors provide at their website, there always seem to be complicating factors which could lead to different interpretations. Many of the trends are those that you would expect from the incidence of poverty. But does that have anything to do with income inequality per se?

Although my progressive leanings originally drew interest in this idea, the more I have thought about it and the more I have stared at the data, the more dubious I have become. Interested people can find out more from the authors’ website, which has more the appearance of a social movement than a scientific data center. References to arguments against their thesis can be found here.

Sunday, January 30, 2011

The Power and Potential of Progressive Tax Rates

The United States is running large federal deficits. Something has to be done. The first solution is always to figure out ways to cut expenses by eliminating services. The second solution never seems to make it on the agenda: raise taxes. The issue is not really to raise taxes so much as to return them to their traditional values. Raising the marginal tax rate on the highest earners is viewed as an economic mortal sin by some.

Eliot Spitzer has an article in “Slate” titled: Debunking the Claim that Higher Tax Rates Reduce GDP. He includes the following chart and commentary.

“A caveat—obvious but critical—is in order. Simultaneity does not equal causation. Annual growth rates are a consequence of many factors, macro and micro, and the isolated impact of marginal tax rates on growth is hard, if not impossible, to discern from these numbers alone.”

“That said, it's obvious that there is no correlation between higher marginal tax rates and slowing economic activity. During the period 1951-63, when marginal rates were at their peak—91 percent or 92 percent—the American economy boomed, growing at an average annual rate of 3.71 percent. The fact that the marginal rates were what would today be viewed as essentially confiscatory did not cause economic cataclysm—just the opposite. And during the past seven years, during which we reduced the top marginal rate to 35 percent, average growth was a more meager 1.71 percent.”

“More sophisticated efforts to analyze this relationship also produce decidedly murky results. An excellent review of this in the Yale Law Journal, "Why Tax the Rich? Efficiency, Equity, and Progressive Taxation," concludes that there is scant, if any, legitimate academic support for the proposition that moderate, as opposed to dramatic, increases in marginal rates have any impact on the willingness of the wealthy to participate in the economy.”
If one accepts the notion that moderate increases in the highest tax rates will not destroy the economy, the next question is “How much gold is there waiting to be harvested?”

The “Tax Foundation” provides us with the necessary data. The results are quite interesting. The taxable income, the amount of tax paid and the effective tax rate of the top 0.1%, 1.0% and 5% are provided. The latest data available is for 2008. We will examine 2007 data as being more representative of a healthy (or at least robust) economy. To make it into these income groups required threshold incomes of:

>0.1%   $2,155,365

>1.0%   $410,096

>5.0%   $160,041
The average tax rates paid by these groups were:

>0.1%   .215

>1.0%   .224

>5.0%   .205

To give the devil his due, these upper income groups pay a large fraction on the total income tax revenue, which was $1,116B in 2007. The taxes paid by these groups were

>0.1%   $225B

>1.0%   $451B

>5.0%   $676B
Considering the marginal tax rates that had been part of our economically healthy past, yet still trying to be moderate, what would be the result of imposing the following effective rates on the three groups?

>5.0% and <1.0%   .25

>1.0% and <0.1%   .35

>0.1%   .50
The net increase in tax revenue from the top group alone would be $300B and a net of $505B from all three groups. That is equivalent to a 45% increase in income tax revenue. A half trillion dollars is a lot of money, even in Washington. It could ease some pain for much more than 1% of the population.

The selected tax rates are not unreasonable. They indicate that society has the option to make different choices if it wishes different social outcomes. The path we seem to be following is to protect the income of the wealthy by eliminating services for the non-wealthy. That does not seem like very smart or very sustainable social policy.

Thursday, January 27, 2011

What the NRA Really Wants

What the NRA is requesting of the government—make that demanding of the government—is the right to have the firepower necessary to overthrow the government. Does everything make sense now? If you have wondered why they oppose anything that would limit access to weapons, consider that most of the people who are interested in the aforementioned goal would be deemed mentally unfit to bear arms by the general populace. They consist of a minority of NRA members, but they are a loud, active minority. And of course the weapons manufacturers are just being good market-oriented capitalists

I came across this recently from William Falk in “The Week,” wherein he describes his moment of epiphany.
“Every time an armed madman fills a school or office or shopping center with bleeding bodies, the question is asked: Why does the National Rifle Association oppose restrictions on semiautomatic weapons and high-capacity ammunition clips? As a non-hunter who's never owned a gun, I used to puzzle over this myself, until I decided some years ago to pay a visit to the local gun club. I told the very friendly group of guys I found there that I understood the need for a handgun or rifle to protect yourself or to hunt. But why insist on legal access to weapons and magazines created for the military and police, with the capacity to massacre dozens of people in seconds? They smiled at my naïveté. One day, they explained, we may need weapons with serious firepower to fight the military and the police, in an armed rebellion against the government.”

“This is not a fringe view, held only by shaved-head militiamen in camouflage uniforms. Though not often discussed around hostile audiences, the belief in the "right of revolution" is a fundamental tenet shared by tens of millions of gun enthusiasts, and is at the heart of the NRA's determined — and successful — fight against gun-control laws. As actor and NRA activist Chuck Norris puts it, "If the government decides to become a tyrannical government, our guns are to protect us against that. And that's really what the Second Amendment is all about." In response to the latest bloodbath, gun-control advocates will once again demand limits on how much killing power citizens can purchase. But it’s "the right of revolution" that will stand in the way.”
My moment came a few years ago when a frequent source for the goings on in our cultural underworld, Joe Bageant, explained it so well. This is from his bookDeer Hunting with Jesus: Dispatches from America’s Class War. The occasion for his comments was his attendance at a Civil War recreation event at Fort Shenandoah in Virginia.
“Across rural and small town America any kind of gun control is seen as an attempt to take away citizens’ rights to protect home and hearth from the crazies and, increasingly, from an authoritarian government. Most of the people at Fort Shenandoah see gun ownership in this light—as a way of stopping the jackboots at their own front doors.”
Among the participants was a subgroup whose notions exceeded the bizarre and attained the scary.
“Most of these men were military gun aficionados and ‘personal weapons collectors.’ In other words, they bought and collected ‘antipersonnel firepower’—guns designed specifically to kill human beings. Without apology....and this is one of the more disturbing fetishes to be found in some dark corners of the gun culture. Hundreds of thousands of American men, maybe a couple of million, no one knows for sure, are obsessed with the micromechanics of lethality—the nuts and bolts and screws of killing human beings. It would be cheating to leave them out of a discussion of armed America, though everyone seems to do just that—pretending they are not there or are not aberrant. Of course, there are far fewer of them than there are ordinary American hunters. But they make up for their small numbers by their weirdness.”
The militia movement may have peaked in the mid-90s with as many as 60,000 participants in all fifty states. In March of last year nine members of a “Christian” militia were arrested for planning to kill police officers in hopes of fomenting an insurrection. Their stated goal was to prepare for a coming battle with the Antichrist. At about the same time a poll came out that indicated that 24% of Republicans suspected that President Obama might be the Antichrist. The crazies are out there. We don’t know how many they are, but we do know that the NRA never rests from its duty to make sure these people are armed and ready.

Wednesday, January 26, 2011

American Soldiers and Torture: Joshua E. S. Phillips

In his book,None of Us Were Like This Before: American Soldiers and Torture, Joshua Phillips has provided us with an enlightening look at the mechanisms by which well-trained, well-intentioned soldiers can convert into dedicated and persistent abusers and torturers of detainees in Iraq and Afghanistan. In the process he makes it quite clear that incidents of abuse were not rare occurrences by a few rogue soldiers, but rather a systemic problem throughout both theaters of action.

Phillips’ tale is built around the experiences of an Army unit from Battalion 1-68. The central character is Adam Gray a soldier who was trained to be a member of a tank crew and was part of the Iraq invasion force. He ended up being assigned to detention duties and participated, with his comrades, in abuse and torture. He committed suicide soon after returning from his tour in Iraq.

Adam Gray is used to represent the many soldiers who fell into the same set of circumstances that he faced. The author’s purpose is not to tell Gray’s personal story in Iraq. He interviews as many veterans of as he could who shared similar experiences in order to construct the conditions under which a sane and healthy young man could participate in torture. Adam Gray is used to remind the reader that the torturer has a human face and a human story. Adam is also critical to one of the author’s goals: to demonstrate that torture takes a terrible toll not only on the victims, but also on the torturers.

The public’s perception of the situation regarding treatment of prisoners, or, more appropriately, detainees is dominated by reports of activities at Guantanamo and Abu Ghraib. The Bush administration worked hard to define the abuses that emerged from those two locations as the work of a few renegades. To counter that notion, and to establish his thesis, he takes us to Afghanistan in 2002 to begin his narrative with the fate of one Afghan prisoner named Dilawar. Phillips recreates this experience with accounts from both soldiers and other detainees.

Dilawar was a young Afghan who is described as earning a living taxiing people around in his car because he was not robust enough for the strenuous physical labor required of the other young men. One day while driving with several passengers he was stopped by an Afghan patrol. One of his passengers was in possession of some common communication equipment and a few foreign phone numbers. The soldiers feared that this could indicate association with insurgents. All in the car were taken into custody and deposited at a U.S Post. They were transferred to Bagram Air Base where they would be detained for interrogation.

After some time in a holding room with others, detainees were transferred to individual cages designed to be too small to stand in and too short to stretch one’s legs. Then the interrogation began. This is Phillips description.
“....the detainees were aroused late at night for questioning. Soldiers poured ice-cold water on them and ventilated the prison to allow the freezing night air to gust over their wet bodies.”

“By now the prisoners were accustomed to having their wrists bound. But the soldiers were lifting them by their arms, hoisting them upward by chains attached to the ceiling. The weight of their bodies, pulling downward as their arms were stretched upward, made breathing difficult. The soldiers still wouldn’t permit them to relax, often making noise to frighten them or keep them awake. Detainees remained hooded, causing further disorientation”

“Some prisoners claimed they were chained ten days and ten nights, their toes just scraping the floor, lowered just for interrogation sessions and short bathroom breaks. Again, no talking was permitted. More infractions meant more beatings on their arms legs and feet. While suspended, prisoners were vulnerable and could not shield themselves from the blows.”
When detainees were not satisfactorily responsive to questions, pressure was applied.
“....said he was forced to do pushups while a soldier stood on his back. Other detainees said they were beaten. Some were ordered to hold their bodies in stress positions for hours, their arms and legs trembling from exhaustion, their ankles swelling, pain shooting through their extremities. Then interrogation sessions ended and they were once again hung from chains.”
Dilawar was a terribly frightened young man who apparently could not take the stress. He continued to scream of his innocence and plead for help as he was suspended by chains. This behavior annoyed the soldiers who were determined to make him quiet down.

One of the techniques used by the soldiers is called the peroneal strike. It would be familiar to them from their training.
“A peroneal strike is a temporarily disabling blow to the side of the leg, just above the knee. The attacker aims at the common peroneal nerve, roughly a hand span above the knee, towards the back of the leg. This causes a temporary loss of motor control of the leg, accompanied by numbness and a painful tingling sensation from the point of impact all the way down the leg, usually lasting anywhere from thirty seconds to five minutes in duration.... The technique is a part of the pressure point control tactics used in martial arts and by law enforcement agents....Repeated strong peroneal strikes can cause nerve damage and have a high chance of damaging the surrounding tissues due to the spontaneous nature of the technique and the nerve location.”
Several soldiers struck Dilawar. One soldier admitted that he had struck him about thirty-seven times. Since Dilawar was hooded the soldiers could not assess the effect of their beating, nor could they ascertain the exact time of his death, or which blow might have done it. The forensic report stated that Dilawar’s legs had been “pulpified.”

This type of treatment constitutes torture by anyone’s definition. These were not rogue soldiers operating surreptitiously. This was standard operating procedure at a major U.S. facility. There is no evidence that there were explicit orders to operate in this manner. The question that Phillips will try to answer is how did it come to this, and so quickly?

Let us first make a stop with Torin Nelson. He was an interrogator trained by the Army. He described his trainers as being highly professional and skilled. He was taught several psychological approaches to extracting information from detainees. He was also taught to abide by the Geneva Conventions. Interestingly, the image of the ideal interrogator was presented as a World War Two German officer named Hans Scharff. He was deemed so successful at the task of interrogating that he was brought to the U.S. after the war to lecture about his methods.
“What was Scharff’s formula for success? In short, it involved a combination of language proficiency; relaxed, casual conversation over the course of several weeks if time permitted; and above all other thing, empathy.”
It is clear that the Army understood how to perform an interrogation. They knew what worked and what did not work. So what went wrong?

Nelson spent time at Guantanamo as an interrogator where he used the techniques he had been taught. He claims that those techniques worked and valuable intelligence was being obtained. In Nelson’s words:
“Unfortunately, it wasn’t the type of information people were looking for, like linking al Qaeda with Saddam Hussein and weapons of mass destruction in Iraq, and chemical weapons training for Saddam’s agents....or an al Qaeda guy [connected to] Iraqi agents. And so people were saying, ‘It’s not good intelligence.’”
Here we see an indication of what would be the driver for the evolving interrogation methods: expediency. Guantanamo was driven by political expediency, in Afghanistan and Iraq military expediency was added to that. By allowing untrained personnel to participate you add another factor: ignorance.

Traditional interrogation techniques require time and patience. If you are not allowed time either because of pressure from superiors or the crush of events, or you are inundated with large number of prisoners, what do you do? At this point there is no manual to follow. The process that Phillips saw emerging from his interviews was driven by a combination of personal experiences, rumor, what might be called urban legends, and pop culture.

Given the situation where you are told that the detainees are not providing adequate information, and being given the suggestion that you should do something about it, soldiers first turn to their own experiences. It was common for soldiers in training to receive physical punishment in the form of exaggerated exercise routines or being forced to assume stress positions for long periods of time. It is not surprising that they would turn to these techniques to inform or punish an uncooperative prisoner. Most were familiar with techniques designed to disable a person without causing permanent damage, such as “pressure-point control tactics” and “compliance blows.” These were easily added to the repertoire. Some received training on how to endure torture, which could be turned around to provide a torture manual. Soldiers would improvise based on tales that were passed around. Someone would suggest that this or that was known to work in Vietnam, so it came to be tried. Sleep deprivation was added to the bag of tricks along with electrical shock. Claims or rumors of techniques tried quickly spread from one theater to another. Phillips quotes several people who were concerned to learn that soldiers’ attitudes toward torture and its effectiveness were being derived from movies and from television shows like “24,” rather than from real world experience.

One derives yet another perspective from Phillips’ interviews with the members of Adam Gray’s unit. These were soldiers trained to man tanks. They discovered that they had no mission in Iraq. They would not get to perform the task they had trained so hard for. They were ultimately assigned to rounding up and detaining suspects for interrogation. They followed a similar path to that described above as they began to resort to abusive treatment, but they provided new justifications: boredom and frustration. Some admitted abusing prisoners to relieve boredom, some to vent anger, and some merely to provide entertainment.

While abusive behavior may not have been directly ordered, it was certainly condoned by superior officers, allowing soldiers to take to the task with alarming ease. One is tempted to conclude that soldiers, isolated from the normal constraints of civilization, and having control over foreign and powerless people, will likely turn to violence. Military organization provides an environment that insulates soldiers from the contacts that would keep them rooted in their previous existence. This insulation, coupled with stress, peer pressure and a group mentality, can lead to irrational and uncharacteristic behavior.

Phillips might not agree with that statement. Here is his summary.
“In the course of my reporting, I tried to find a straightforward interpretation for the development of US torture during the war on terror. But I failed to find a one-size-fits-all explanation for the myriad cases in Afghanistan, Iraq, and Guantanamo. As one human rights lawyer told me, ‘There isn’t a grand theory of US torture that encapsulates and explains all the abuses that have taken place in the war on terror.’ The more I learned about detainee abuse, the more I found myself agreeing with that sentiment.”
Phillips concludes his narrative with a chapter called “Homecoming.” To Adam Gray’s story he adds that of Jonathan Millantz. The author had a chance to talk to Millantz several times while researching this book. Millantz eventually succumbed to his memories and guilt and took his life. The author’s descriptions of the effects of the war and the tragic aftermath on the families of the two soldiers are poignant and memorable.

The title of the book is taken from this comment made by one of the soldiers after returning home.
“None of us were like this before....No one thought of dragging people through concertina wire or beating them or sandbagging them or strangling them or anything like that...before this.”
The soldiers Phillips talked to all seemed to be affected by what they had done, although a few claimed to know of those who came through the experience unaffected. One almost hopes that is not true.

Phillips provides this comment on a study performed on Vietnam veterans related to post traumatic stress disorder (PTSD).
“The researchers found a strong correlation between increased exposure to combat and psychological trauma. But the report also found that ‘abusive violence had the strongest correlation with PTSD’ for Vietnam veterans. This abusive violence included, but wasn’t exclusive to, the ‘degree of involvement in torturing, wounding, or killing hostages or POWs.’”

“’We can go into long philosophical discussions of torture....but the one thing the research has shown is that it is not good for the people doing it,’ said Dr. Richard Kulka, the chief author of the study.”
While composing this post I came across an article that provided this announcement.
“For the second year in a row the US Military has lost more troops to suicide than it has to combat in Iraq and Afghanistan.”
One lesson to be learned from this book is that the prevalence of violence demands some sort of response from the military. Countering these tendencies towards abusive behavior with some form of training or oversight would seem to be in order—for both enlisted personnel and officers. In addition to the moral concerns, this behavior was not productive, and it did irreparable harm to the reputation of the United States.

Joshua Phillips’ book tells us things we need to know—not only about the nature of warfare, but also about the nature of human beings.

Monday, January 24, 2011

Holding Students Back: Performance Results and Charter Schools

The question of how best to motivate our children to perform better has arisen again. The subject of “tiger moms” has become a major topic in the popular press. This topic represents an example of the extremes parents might go to in order to get results from their children.

A less often asked, but equally important question is to what lengths should a school, or school system, go to demand that a child deliver? One response is the threat that children who do not perform at the appropriate level will not be allowed to proceed to the next grade. This has traditionally been viewed as an extreme action that is not resorted to very often. Traditional school systems occasionally go through spasms of guilt or self-doubt and begin holding back significant numbers of students, but usually soon revert to normal practice and pass the problem students on. There are in fact data and arguments that would support that practice.

Sarah Garland has provided an interesting review of this practice in an article titled Repeat Performance in “The American Prospect.” The motivation for the article was mostly derived from the increasing number of charter schools that have been aggressive in the practice of holding students back. This is of interest both for the discussion of whether this is a worthwhile process and in order to determine if this practice has contributed to inflating performance measurements at some charter schools.

One should keep in mind the children and schools fall into at least three age groups: elementary, middle and high school. Each school and each age group faces a different set of issues when it comes to the question of holding a child back. In the early grades, a year difference in age can amount to 15-20% of a child’s lifetime. Considering that, and the differences in maturation rates between individuals, there is probably the best argument for holding students back when they are very young. Many parents choose to wait a year to start school rather than have their child be the youngest in the class. A school’s decision to hold a child back probably has the least impact on the child’s life at an early age.

In middle school and especially in high school there are social implications to being held back that could easily outweigh any beneficial academic effects. At these ages children have fairly well-defined personalities. One who is not motivated to perform better, or not capable of it, is not likely to improve much after being held back.

Garland provides us with results from several studies.
“Studies have found that in the long term, students who are held back in middle or high school learn less and are more likely to drop out.”

“Nick Montgomery, a senior research analyst at the Consortium on Chicago School Research, which conducted a long-term study of retention policies, says his team found that students who were held back after elementary school were more likely to drop out later on. In addition, Montgomery says, ‘students who repeat grades during middle school learn somewhat less than their [low-performing] peers who don't repeat’.”

“Retention brings other problems, too. Researchers have written about the psychological impact of separating students from their age group. It can be hard on the retained students, but also on teachers and younger students. They may have to contend with kids who are 15 and 16 years old in middle school and who may have behavioral problems in addition to their academic issues. At the same time, students who are retained are by nature already struggling and more likely to be disengaged with school. Being held back can increase their frustration by moving back the finishing line of graduation and, in the words of the Chicago Consortium researchers, making it seem less ‘worthwhile to continue’."
None of the quotes studies address the issue of holding back in the elementary grades. These citations would indicate that retention is, at best, a useless process. Of course one might be moved to ask if the practice itself at fault, or if the blame should go to the students, the parents, or to the schools themselves.

With respect to charter schools, Garland provides the following data.
“Although there are no national statistics tracking the percentage of students held back in charters, there is evidence that the number is large. Schools in charter hotspots like New York and Houston report retention rates as high as 23 percent, much higher than the district averages, which range from 1 percent to 4 percent. Margaret Raymond, director of the Center for Research on Education Outcomes at Stanford University, which conducted a major national study on charter-school performance, says she's observed that charter schools tend to hold students back at higher rates than regular public schools. And a recent national study by Mathematica, a research firm based in Princeton, New Jersey, found that a sample of KIPP middle schools, the biggest charter network in the country, had a significantly higher retention rate than traditional public schools.”

“High retention rates can help to boost test scores at charter schools, at least in the short term. Students may do better on tests the second time, and retained students' scores are dropped from their cohort, so a class of students could improve its test scores over time because the lowest performers have been removed. And sometimes low performers simply leave the charter school when they find out they're going to be held back.”

“The charter schools defined as "good" -- at least as measured by standardized test scores -- tend to be those with high retention rates. But if, as Obama is demanding, a school's worth is measured by how many of its students are prepared for and go on to college, then it's much harder to tell how charters are doing. KIPP reports high college-going rates among its students, as do a handful of other charters. But at some charters, students who leave the school, as students who are retained often do, are not counted toward graduation rates. (KIPP leaders say they track even students who leave.) For charter schools nationally, there is virtually no data on long-term outcomes for students.”
It is vital that we understand which charter schools perform well and which do not. The purpose of charters is to experiment with methods, and then transfer the best methods back to the traditional schools where the majority of students reside. The various charter organizations seem to have a variety of approaches to deciding whether or not a student should be held back. This seems like an area in which some trial and error is appropriate, but the subsequent student performance must be monitored and understood. It seems way too early to make a judgment.

Garland is suggesting that the charter schools might be cooking the books in their favor. She does not actually accuse them of malfeasance, but she does plant the seed in the reader’s mind. It might be premature to go that far. However, she is absolutely correct to raise the efficacy of student retention up for public scrutiny.

If the good charter schools are demanding accountability from their students and imposing consequences, they should be given a chance to demonstrate that that can be made to work. Retention should be a precision tool, not a blunt one, and educators—and parents— will have to learn how to use it wisely. By all means let us experiment some. Let loose a bit of “tiger” into the system. The alternate view, based on Garland’s data, is that either the students are hopeless, or the schools are hopeless. Neither conclusion is very satisfying.

Sunday, January 23, 2011

Medical Science and the Vanishing Truth

Jonah Lehrer has produced a fascinating and deeply troubling article in “The New Yorker:” The Truth Wears Off. He reports on a bizarre observation from the field of experimental science. It appears that experimental results that were considered unassailable are being observed to fail the test of replicability. When an interesting result is published, its validity should not be assumed until the results have been reproduced by another team. It is common in the physical sciences for one researcher’s success to goad on others to collect a little of the glory, either by verifying the result or, even better, proving the result to be wrong. This approach works quite well in the physical sciences where inanimate objects are generally being studied and most of the funding comes from the government.

Tests of replicability are less common in the medical sciences where the experiments can be more difficult to control and can be quite costly. There is also the fact that many studies are financed and carried out by people with a vested financial interest in the results. This system is fraught with opportunities for abuse. The inaccuracies associated with medical test results were discussed previously in a post titled Lies, Damned Lies, and Medical Science.

Lehrer details the mechanisms by which inaccuracies can be introduced in all sciences, drawing his examples from the collection available in the medical arena.
“On September 18, 2007, a few dozen neuroscientists, psychiatrists, and drug-company executives gathered in a hotel conference room in Brussels to hear some startling news. It had to do with a class of drugs known as atypical or second-generation antipsychotics, which came on the market in the early nineties. The drugs, sold under brand names such as Abilify, Seroquel, and Zyprexa, had been tested on schizophrenics in several large clinical trials, all of which had demonstrated a dramatic decrease in the subjects’ psychiatric symptoms. As a result, second-generation antipsychotics had become one of the fastest-growing and most profitable pharmaceutical classes. By 2001, Eli Lilly’s Zyprexa was generating more revenue than Prozac. It remains the company’s top-selling drug.”

“But the data presented at the Brussels meeting made it clear that something strange was happening: the therapeutic power of the drugs appeared to be steadily waning. A recent study showed an effect that was less than half of that documented in the first trials, in the early nineteen-nineties. Many researchers began to argue that the expensive pharmaceuticals weren’t any better than first-generation antipsychotics, which have been in use since the fifties. ‘In fact, sometimes they now look even worse,’ John Davis, a professor of psychiatry at the University of Illinois at Chicago, told me.”

“But now all sorts of well-established, multiply confirmed findings have started to look increasingly uncertain. It’s as if our facts were losing their truth: claims that have been enshrined in textbooks are suddenly unprovable. This phenomenon doesn’t yet have an official name, but it’s occurring across a wide range of fields, from psychology to ecology. In the field of medicine, the phenomenon seems extremely widespread, affecting not only antipsychotics but also therapies ranging from cardiac stents to Vitamin E and antidepressants: Davis has a forthcoming analysis demonstrating that the efficacy of antidepressants has gone down as much as threefold in recent decades.”
Lehrer attributes this startling trend not to some mysterious physical phenomenon, but three rather mundane facts about humans and nature. The first he describes as publication bias.
“In 2001, Michael Jennions, a biologist at the Australian National University, set out to analyze “temporal trends” across a wide range of subjects in ecology and evolutionary biology. He looked at hundreds of papers and forty-four meta-analyses (that is, statistical syntheses of related studies), and discovered a consistent decline effect over time, as many of the theories seemed to fade into irrelevance.”

“Jennions, similarly, argues that the decline effect is largely a product of publication bias, or the tendency of scientists and scientific journals to prefer positive data over null results, which is what happens when no effect is found. The bias was first identified by the statistician Theodore Sterling, in 1959, after he noticed that ninety-seven per cent of all published psychological studies with statistically significant data found the effect they were looking for.... Sterling saw that if ninety-seven per cent of psychology studies were proving their hypotheses, either psychologists were extraordinarily lucky or they published only the outcomes of successful experiments. In recent years, publication bias has mostly been seen as a problem for clinical trials, since pharmaceutical companies are less interested in publishing results that aren’t favorable. But it’s becoming increasingly clear that publication bias also produces major distortions in fields without large corporate incentives, such as psychology and ecology.”
Here is another way of looking at this dynamic.
“...after a new paradigm is proposed, the peer-review process is tilted toward positive results. But then, after a few years, the academic incentives shift—the paradigm has become entrenched—so that the most notable results are now those that disprove the theory. “
The second contribution to the phenomenon is even more troubling: selective reporting. This refers to the fact that scientists, given a large mass of data, will preferentially select data that agrees with their preconceptions. This is often done subconsciously or inadvertently, but it happens.
“....selective reporting is not the same as scientific fraud. Rather, the problem seems to be one of subtle omissions and unconscious misperceptions, as researchers struggle to make sense of their results. Stephen Jay Gould referred to this as the “shoehorning” process.”

“One of the classic examples of selective reporting concerns the testing of acupuncture in different countries. While acupuncture is widely accepted as a medical treatment in various Asian countries, its use is much more contested in the West. These cultural differences have profoundly influenced the results of clinical trials. Between 1966 and 1995, there were forty-seven studies of acupuncture in China, Taiwan, and Japan, and every single trial concluded that acupuncture was an effective treatment. During the same period, there were ninety-four clinical trials of acupuncture in the United States, Sweden, and the U.K., and only fifty-six per cent of these studies found any therapeutic benefits. As Palmer notes, this wide discrepancy suggests that scientists find ways to confirm their preferred hypothesis, disregarding what they don’t want to see. Our beliefs are a form of blindness.”
The author then brings back the results of the redoubtable Dr. Ioannidis
“John Ioannidis, an epidemiologist at Stanford University, argues that such distortions are a serious issue in biomedical research. “These exaggerations are why the decline has become so common,” he says. “It’d be really great if the initial studies gave us an accurate summary of things. But they don’t. And so what happens is we waste a lot of money treating millions of patients and doing lots of follow-up studies on other themes based on results that are misleading.” In 2005, Ioannidis published an article in the Journal of the American Medical Association that looked at the forty-nine most cited clinical-research studies in three major medical journals. Forty-five of these studies reported positive results, suggesting that the intervention being tested was effective. Because most of these studies were randomized controlled trials—the “gold standard” of medical evidence—they tended to have a significant impact on clinical practice, and led to the spread of treatments such as hormone replacement therapy for menopausal women and daily low-dose aspirin to prevent heart attacks and strokes. Nevertheless, the data Ioannidis found were disturbing: of the thirty-four claims that had been subject to replication, forty-one per cent had either been directly contradicted or had their effect sizes significantly downgraded.”
Lehrer has one more factor to discuss. He points out that many scientific results can be attributed to mere noise. By noise he means a combination of statistical excursion and effects of unknown and uncontrolled variables. Anyone who has ever tried to use Monte Carlo methods to describe a physical system will be well aware of the fickleness of statistics. The existence of unknown unknowns is why scientists insist on independent replication of results.

Lehrer provides a quote from a biologist named Palmer that will serve as an appropriate summary of this discussion.
“We cannot escape the troubling conclusion that some—perhaps many—cherished generalities are at best exaggerated in their biological significance and at worst a collective illusion nurtured by strong a-priori beliefs often repeated.”
Unfortunately, when dealing with medical science, billions of dollars and the health of millions of people are involved.

Thursday, January 20, 2011

Gendercide Revisited

The ratio of males born to females born can vary slightly from society to society, but in all countries the recorded values have fallen within the range 1.03 to 1.06 unless human intervention has precluded the birth of females via abortion or infanticide. Unfortunately, the preference in some societies for sons over daughters has led to widespread intervention, a process that has been referred to as gendercide. Kristof and WuDunn introduced us to this concept, in their book Half the Sky in a slightly broader context. A recent article in “The Economist” has provided an update on the scale of this practice and investigates what the future might hold in store.

The chart below indicates the extent of the practice of eliminating female babies.

When you consider countries like China and India with over a billion people each, you face tens of millions of children who don’t exist because they happened to be female.

The preference for sons is well established in many societies. It often has an economic motivation. Daughters can be very expensive in societies where a dowry must be provided. An ultrasound and an abortion are much cheaper. When a family plans on having only a few children, the necessity of ensuring a male becomes more critical.

When this male preference was combined with gender-determining technology and social pressure to limit the size of families, the incidence of gendercide increased dramatically.
“In China the sex ratio for the generation born between 1985 and 1989 was 108, already just outside the natural range. For the generation born in 2000-04, it was 124 (ie, 124 boys were born in those years for every 100 girls). According to CASS (Chinese Academy of Social Sciences) the ratio today is 123 boys per 100 girls. These rates are biologically impossible without human intervention.”

“The national averages hide astonishing figures at the provincial level. According to an analysis of Chinese household data carried out in late 2005 and reported in the British Medical Journal, only one region, Tibet, has a sex ratio within the bounds of nature. Fourteen provinces—mostly in the east and south—have sex ratios at birth of 120 and above, and three have unprecedented levels of more than 130. As CASS says, ‘the gender imbalance has been growing wider year after year’.”
India is pinpointed as the country with the most dramatic example of this process at work.
“India does not produce figures for sex ratios at birth, so its numbers are not strictly comparable with the others. But there is no doubt that the number of boys has been rising relative to girls and that, as in China, there are large regional disparities. The north-western states of Punjab and Haryana have sex ratios as high as the provinces of China’s east and south. Nationally, the ratio for children up to six years of age rose from a biologically unexceptionable 104 in 1981 to a biologically impossible 108 in 2001. In 1991, there was a single district with a sex ratio over 125; by 2001, there were 46.”
The author points out clearly that this practice can’t be attributed to poverty or lack of education.
“Taiwan’s sex ratio also rose from just above normal in 1980 to 110 in the early 1990s; it remains just below that level today. During the same period, South Korea’s sex ratio rose from just above normal to 117 in 1990—then the highest in the world—before falling back to more natural levels. Both these countries were already rich, growing quickly and becoming more highly educated even while the balance between the sexes was swinging sharply towards males.”
The dynamic at work can be seen in this chart where the combination of technology and social change has contributed to an overabundance of male births in recent years. Note the exception that is South Korea.

The author points to South Korea as the one demonstration that attitudes can change. While the first impact of modernity is to encourage gendercide, slower more subtle effects may ultimately win out and gain a higher status for women. This is apparently what happened in South Korea. As is often the case, culture can be modified by economics. When South Korea’s economy began to grow rapidly an expanded work force was required. Women had to become educated and skilled. Their economic value rose and along with it their social value. This was followed by a decline in the male-to-female birth ratio.

The author suggests that there is evidence emerging that a similar dynamic is beginning to take root in other parts of the world.
“It is just possible that China and India may be reaching that point now. The census of 2000 and the CASS study both showed the sex ratio stable at around 120. At the very least, it seems to have stopped rising. Locally, Ms Das Gupta argues, the provinces which had the highest sex ratios (and have two-thirds of China’s population) have seen a deceleration in their ratios since 2000, and provinces with a quarter of the population have seen their ratios fall. In India, one study found that the cultural preference for sons has been falling, too, and that the sex ratio, as in much of China, is rising more slowly.”
While the data to prove this contention seems a bit sketchy at this point, let’s hope he/she is correct. And let us continue to try and eliminate gender preferences.

Wednesday, January 19, 2011

The Dearth of Births: Japan and More

The average number of births per woman is referred to as the fertility rate for a population. For most countries a number of about 2.1 would lead to a steady-state population. The fertility rate varies widely from country to country with economic conditions and cultural mores playing a significant role. A tabulation of this value for the countries of the world can be found here. The only country not included is Vatican City, which might have provided the most interesting data of all.

The top country is Niger with a fertility rate of 7.19. Twenty-two of the top twenty-five are African countries with Mozambique at twenty-fifth with 5.11. The three exceptions are Afghanistan (7.07), East Timor (6.53), and Yemen (5.50). At the bottom of the list are a suite of Asian countries.

Macau         0.91

Hong Kong  0.97

South Korea 1.21

Singapore     1.26

Japan            1.27
Also at the bottom are a slew of Eastern European countries with eerie similarities.

Belarus        1.20

Ukraine        1.22

Poland          1.23

Bosnia/Herz. 1.23

Czech Rep.   1.24

Slovakia        1.25

Lithuania        1.26
The table includes data spanning 2000-2005, and 2005-2010. It is interesting that the United States comes in at a steady 2.05, right at the replacement level. That of the world as a whole is 2.55. China, with all its population control efforts, is at 1.73. Russia is at 1.34. Perhaps the gloom of Russia still casts a pall over Eastern Europe.

It is easy to come up with economic and cultural rationals for high birth rates in Africa, but an explanation for the lower rates of Asia and Eastern Europe is not quite so obvious. An attempt is made to explain Japan in an article in “The Economist:” The Dearth of Births: Why are so few young Japanese willing to procreate?
“Since the mid-1970s, when it became clear that the number of births was resolutely declining, Japanese governments have made efforts to encourage people to have more babies. But for all that they have increased child benefits and provided day-care centres in the past 30 years, the birth rate has remained stubbornly low. One reason is that in Japan, unlike in the West, marriage is still more or less a prerequisite for having children. Only 2% of births take place out of wedlock. And weddings cost a lot of money. The more elaborate sort may involve renting a chocolate-box “church” and hiring or buying at least three bridal outfits. The average cost of a Japanese wedding is about ¥3.2m ($40,000).”

“Having gone to all that trouble, married couples do, in fact, have an average of slightly more than two children, just above what is needed for births to exceed deaths. The trouble is that fewer and fewer people get married. Women wait ever longer and increasingly do not bother at all. According to the NIPSSR, six out of ten women in their mid- to late 20s, which used to be the peak child-bearing age, are still unwed. In 1970 the figure was two out of ten. And almost half the men between 30 and 34 were unmarried in 2005, more than three times as many as 30 years ago.”
The reasons why marriage rates are low seem to be cultural quirks unique to the Japanese.
“But the cost of weddings may be the least of the reasons why the Japanese are increasingly putting off marriage or avoiding it altogether. One weightier one is that employment rates among women have increased but private companies implicitly discourage mothers from returning to their old jobs. Toshiaki Tachibanaki, an economist who has written on inequality among Japanese women, finds that about 80% of female civil servants return to their old jobs after having children because they get reasonable maternity benefits and help with child care. But in private companies they are typically less well looked after, and only about a third go back to work.....So most women are forced to take low-paid irregular or part-time jobs after having children.”

“It does not help that unemployment is high and incomes are low among the young—especially among young men, who increasingly give up even looking for jobs. One of Japan’s most prominent sociologists, Masahiro Yamada of Chuo University, thinks that most young Japanese women still want to be housewives, but are struggling to find a breadwinner who earns enough to support them. He points out that half the young people of prime marrying age—20-34—still live with their parents. In the 1990s he coined the term ‘parasite singles’ to describe them. They seemed to be getting a good deal, saving money on rent and spending it on foreign travel and luxury goods instead. If they wanted privacy, they could always go to one of Japan’s ubiquitous love hotels.”
Japanese men take a beating in this article, consistent with other reports that have been published.
“Since then the ‘parasites’ have got older, and a lot of them are living with their parents not because they want to but because they cannot afford to live independently. They are moving towards middle age but have remained single, working for low pay or unemployed. Some have even become what Mr Yamada calls ‘pension parasites’, living on their parents’ pensions.”

“Part of the problem may be that young men, who during Japan’s free-wheeling boom era rarely saw their workaholic fathers, do not want to fall into the same trap. Some of them have become ‘grass-eating men’ who prefer clothes and cosmetics to cars and avoid life in the fast lane. Others resort to hikikomori, locking themselves in their bedrooms and refusing to talk to anyone, even the parents who deliver food to them. Many of them have watched their mothers divorce their fathers on retirement. Those men are cruelly known as ‘dead wet leaves’, whose wives have trouble sweeping them out of the home. The Japanese are also learning from personal experience that looking after elderly parents can be more costly and time-consuming than looking after children. That may be another factor in their calculations.”
Factors that inhibit marriage will, in general, drive down birth rates. That could be part of the explanation for the low rates observed in other countries. However, this explanation for Japanese behavior is so intriguing that one might wish that each country had its own tale to tell.

Tuesday, January 18, 2011

College Education: Little Learned, Then Little Earned

Two recent articles shed some light on the college experience of students and the post-graduation experience of wage earners. Neither article is encouraging.

The AP has a report on a new book "Academically Adrift: Limited Learning on College Campuses," by sociologists Richard Arum of New York University and Josipa Roksa of the University of Virginia. The summary findings:
“A study of more than 2,300 undergraduates found 45 percent of students show no significant improvement in the key measures of critical thinking, complex reasoning and writing by the end of their sophomore years.”

“Not much is asked of students, either. Half did not take a single course requiring 20 pages of writing during their prior semester, and one-third did not take a single course requiring even 40 pages of reading per week.”
This is apparently the beginning of a long-term study to track student learning over time. A standardized test, ” College Learning Assessment,” is given to students before starting and then during their years in school to measure progress. One might have questions as to the validity of such testing, but I can only assume these people know what they are doing. Especially since the results seem to fit so well the student stereotype (caricature?).
“Overall, the picture doesn't brighten much over four years. After four years, 36 percent of students did not demonstrate significant improvement, compared to 45 percent after two.”

“Students who studied alone, read and wrote more, attended more selective schools and majored in traditional arts and sciences majors posted greater learning gains.”

“Social engagement generally does not help student performance. Students who spent more time studying with peers showed diminishing growth and students who spent more time in the Greek system had decreased rates of learning, while activities such as working off campus, participating in campus clubs and volunteering did not impact learning.”

“Students from families with different levels of parental education enter college with different learning levels but learn at about the same rates while attending college. The racial gap between black and white students going in, however, widens: Black students improve their assessment scores at lower levels than whites.”
After graduating, the experience does not improve.
“Subsequent research found students one year out of college are not faring well: One-third moved back home, and 10 percent were unemployed. The findings are troubling news for an engaged citizenry, Arum said. Almost half of those surveyed said they rarely if ever discuss politics or public affairs with others either in person or online.”
If this is the fate of the people we are graduating, then producing even more of them is unlikely to have much of a beneficial effect on the economy. That is the subject of a second article by Daniel Indiviglio in “the Atlantic,” "Would More Education Reduce Unemployment and Income Inequality."  We will pass on the issue of unemployment until a later time. The author presents results from a long report by Lawrence Mishel for the Economics Policy Institute.

The following chart is provided to indicate just how unequal income has become.

“Much of the wage inequality the U.S. has been experiencing has occurred because a small handful of people are able to become very, very rich thanks to modern communications, marketing, and technology. But for everyone else, incomes have not changed much. Education has little to do with this, as a college degree, or even an advanced degree, does not guarantee anyone who obtains one a seat in the top 10% of earners. Obviously a far larger portion or Americans than that obtain college degrees.”
The author refers to the spread in income between college graduates and high school graduates as the college wage premium. In recent times this premium has decreased to the point that college graduates are not experiencing any benefit from the increased income inequality. In other words, the top 5% are running away from the college graduates just as fast as from the high school graduates. In fact, both educational classes have seen wage drops in recent years.

Mishel’s conclusion on income inequality:
“... the pay of college graduates is as disconnected from productivity growth as is the pay of high school graduates. Vastly expanding college enrollment and completion will do nothing to address this problem.”
Another conclusion might be that if you are still waiting for that trickle down economy to reach you, you had better be very young.

Monday, January 17, 2011

Is This Really “The End of Men”?

Hanna Rosin provides some interesting discussion with the provocatively titled article, The End of Men, in “the Atlantic” Magazine. She begins with this preamble.
“Earlier this year, women became the majority of the workforce for the first time in U.S. history. Most managers are now women too. And for every two men who get a college degree this year, three women will do the same. For years, women’s progress has been cast as a struggle for equality. But what if equality isn’t the end point? What if modern, postindustrial society is simply better suited to women? A report on the unprecedented role reversal now under way— and its vast cultural consequences.”
We will begin by letting Rosin make her case. That will be followed by some discussion of her claims. We will close with a counter argument presented by Ann Friedman in “The American Prospect.”

Rosin poses the issue as one of social roles rather than one tied to longer-term physical evolution. As such, societal roles can change quickly—in the case of women, within a generation.
“What if the modern, postindustrial economy is simply more congenial to women than to men? For a long time, evolutionary psychologists have claimed that we are all imprinted with adaptive imperatives from a distant past: men are faster and stronger and hardwired to fight for scarce resources, and that shows up now as a drive to win on Wall Street; women are programmed to find good providers and to care for their offspring, and that is manifested in more- nurturing and more-flexible behavior, ordaining them to domesticity. This kind of thinking frames our sense of the natural order. But what if men and women were fulfilling not biological imperatives but social roles, based on what was more efficient throughout a long era of human history? What if that era has now come to an end? More to the point, what if the economics of the new era are better suited to women?”
She then assembles a series of statements (some dubious) to support her thesis.
“Earlier this year, for the first time in American history, the balance of the workforce tipped toward women, who now hold a majority of the nation’s jobs. The working class, which has long defined our notions of masculinity, is slowly turning into a matriarchy, with men increasingly absent from the home and women making all the decisions. Women dominate today’s colleges and professional schools—for every two men who will receive a B.A. this year, three women will do the same. Of the 15 job categories projected to grow the most in the next decade in the U.S., all but two are occupied primarily by women. Indeed, the U.S. economy is in some ways becoming a kind of traveling sisterhood: upper-class women leave home and enter the workforce, creating domestic jobs for other women to fill.”
I don’t know where Rosin gets her data, but if you go to the Bureau of Labor Statistics (BLS) website you will find this data: number employed over age 20: men 71.2 million, women 63.8 million. The term “workforce” would include the unemployed, but the conclusion would not change. The author’s reference to the workforce of the future is based on a BLS projection which indicates that the jobs expected to be created are numerically disposed to low-wage, low-skill jobs that have traditionally been populated by women for historical reasons. I would not agree that this represents a feminine trend, rather it suggests an unhealthy economy.
“The postindustrial economy is indifferent to men’s size and strength. The attributes that are most valuable today—social intelligence, open communication, the ability to sit still and focus—are, at a minimum, not predominantly male. In fact, the opposite may be true. Women in poor parts of India are learning English faster than men to meet the demands of new global call centers. Women own more than 40 percent of private businesses in China, where a red Ferrari is the new status symbol for female entrepreneurs. Last year, Iceland elected Prime Minister Johanna Sigurdardottir, the world’s first openly lesbian head of state, who campaigned explicitly against the male elite she claimed had destroyed the nation’s banking system, and who vowed to end the “age of testosterone.”
At this point Rosin brings up what might be called the dominant characteristics provided to the genders by evolution. I have no argument with her selection of dominant characteristics. My problem is with the blanket categorization that implies that all members of a gender are confined by these characteristics. Men are bigger and faster, but a motivated female athlete can play basketball better than say 99% of the male population; a female marathon runner can outperform 99% of the male population. We won’t even touch the sport of gymnastics. Can we not recognize that men, properly motivated, can demonstrate the social skills she so uniquely attributes to women?
“But women are also starting to dominate middle management, and a surprising number of professional careers as well. According to the Bureau of Labor Statistics, women now hold 51.4 percent of managerial and professional jobs—up from 26.1 percent in 1980. They make up 54 percent of all accountants and hold about half of all banking and insurance jobs. About a third of America’s physicians are now women, as are 45 percent of associates in law firms—and both those percentages are rising fast. A white-collar economy values raw intellectual horsepower, which men and women have in equal amounts. It also requires communication skills and social intelligence, areas in which women, according to many studies, have a slight edge. Perhaps most important—for better or worse—it increasingly requires formal education credentials, which women are more prone to acquire, particularly early in adulthood.”
We are all glad to note that women are beginning to receive their due in the commercial world. We will also acknowledge that they have demonstrated an aptitude in certain areas where they may eventually settle into a disproportionate fraction of the positions. College attendance and graduation figures also indicate that women are currently more aggressive in attaining educational goals, although recent evidence indicates that the male-to-female ratio in colleges is beginning to rise again. Women entered the workforce in large numbers only when the economic conditions not only allowed it—but demanded it. New types of jobs were being created and families began to need that second income. Women have generally chosen to not compete with men in science and engineering. Is this because they can’t? Of course not! It is because of some sort of cultural imperative that they tend to go in other directions. As Rosin points out this also is gradually changing and female participation is inexorably rising. If women can adapt to changing environments why can’t men? Men have their own cultural imperatives that society imposes upon them. They will not change overnight, but they will change.
“Researchers have started looking into the relationship between testosterone and excessive risk, and wondering if groups of men, in some basic hormonal way, spur each other to make reckless decisions. The picture emerging is a mirror image of the traditional gender map: men and markets on the side of the irrational and overemotional, and women on the side of the cool and levelheaded.”
Markets and risk are driven more by greed than by testosterone. If women have been charged with fewer dumb actions it is probably due to lack of opportunity. I will wait to see some of these studies before I find Rosin’s claim convincing.
“Over the years, researchers have proposed different theories to explain the erosion of marriage in the lower classes: the rise of welfare, or the disappearance of work and thus of marriageable men. But Edin thinks the most compelling theory is that marriage has disappeared because women are setting the terms—and setting them too high for the men around them to reach. “I want that white-picket-fence dream,” one woman told Edin, and the men she knew just didn’t measure up, so she had become her own one-woman mother/father/nurturer/provider. The whole country’s future could look much as the present does for many lower-class African Americans: the mothers pull themselves up, but the men don’t follow. First-generation college-educated white women may join their black counterparts in a new kind of middle class, where marriage is increasingly rare.”
The emergence of women as competitive wage earners has caused social changes. It is something with which both genders have to learn to deal. The studies I am familiar with seem to indicate that men are beginning to accept a relationship in which the woman is the dominant wage earner—perhaps even the only wage earner. Women are probably still driven by the social imperative to mate with someone who is capable of providing for them. Clearly that can’t always be the case. Business conditions have mitigated against married women, particularly those with family obligations. Those constraints are gradually easing as everyone, including businesses, learns how to better deal with this new work environment. Rosin associates finality with what is really just a snapshot of an ever-evolving situation. We have a long way to go yet. Stay tuned.

Ann Friedman provides an interesting counter argument which addresses a number of Rosin’s contentions that I did not include here. I do need to include her most relevant passages. They informed my own thought on this matter.
“It's disappointing that, despite a history of sharp observations about gender and 5,000 words to work with, Rosin makes the same oversight as all of the other hand-wringing articles about the state of the American male. She thinks the problem is men; really, it's traditional gender stereotypes. The narrow, toxic definition of masculinity perpetuated by Rosin and others -- that men are brawn not brains, doers not feelers, earners not nurturers -- is actually to blame for the crisis.”

“Unlike some other chroniclers of the so-called decline of masculinity, Rosin acknowledges men are not biologically predisposed to jobs that require strength and aggression, just as women are not biologically destined to be better thinkers and caregivers. Yet her underlying assumption is that the growth industries we currently consider to be "women's work" (nursing, home health care, food service, child care) will always retain that designation. Maybe it's just my feminist idealism talking, but I fail to see why these "nurturing professions," as Rosin dubs them, must forever be the province of women. Not once does she posit what would happen if we stopped writing articles that reinforced the stereotype that men are best suited to the manufacturing and finance sectors.”

“Perhaps the answer lies in the success of these high-achieving women. In previous generations, women busted all sorts of gender stereotypes in order to get their piece of the economic pie. While there were various schools of thought among feminists about how to best make the case for hiring women, all involved reshaping popular notions about women's abilities. Women could be firefighters and floor traders, CEOs and carpenters. The best man for the job just might be a woman, or so the 1970s slogan went.”

“It's long past time we also acknowledge that the best woman for the job might just be a man.”
Clearly, we are experiencing a massive social and cultural revolution. I can’t believe that only half the people will chose to participate.

Sunday, January 16, 2011

Our Dependence on the Stock Market, and Why We Should Be Worried

The Great Stock Myth is the title of an article in the “Atlantic” magazine by Megan McArdle. The subtitle is even more eye catching: “Why the Market’s Rate of Return—and Your Nest Egg—May Never Recover.” The author provides us with a reminder of just how much society depends on investment earnings for our financial health—both as individuals and as a country. The stock markets are the investment vehicle we turn to, and if they are not healthy then we are in a world of hurt.

Investment return from stocks has varied widely over time, but perhaps the defining moment for the psyche of at least a generation of investors was the boom that lasted from 1982 to 2000.
“Americans jumped into the stock market, first tentatively, then eagerly, and finally almost hysterically. Convinced that equities offered an attractive risk-reward ratio, they began bidding up the price of stocks. Stock-price increases fueled expectations of further growth, until by 1999, a Securities Industry Association survey showed that investors expected to earn an annual rate of return of 30 percent. In other words, they expected that by 2010, stock prices would have skyrocketed.”

“Their actual return, of course, has mostly been negative. Over the past decade, equity investing hasn’t offered much of a premium. The market went up (the Dow hit another record high in the middle of the decade). But then it went down again. In finance terminology, we experienced a lot of volatility—the major indexes have fluctuated a lot—but not much real growth.”

“A survey done by ING Direct in March of this year found that, even after a decade of lousy returns and a spectacular market crash, more than a quarter of Americans expect annual returns in the stock market to average 10 to 20 percent.”
The Dow Jones Industrial Average appreciated at the rate of 5.3% compounded annually during the twentieth century, but for long periods it was relatively flat or negative.

What would be the ramifications if we are entering an extended period where returns are lower than even this long-term average?
“If the return on equities really has fallen, this decline poses a big problem for the average investor who planned to stick 5 to 10 percent of his or her annual income into stock funds and retire comfortably. At an annual inflation-adjusted growth rate of 8 percent, savings of just 5 percent of your income for 30 years will leave you with a nest egg big enough to replace almost half your income when you retire. Saving 10 percent will make you really comfortable.”

“But if the return is 2 to 3 percent, you’ll need to save close to 40 percent to replace almost half of your income.”

“Private pensions are heavily regulated to protect workers. But regulation hasn’t stopped the plans from being underfunded, in part because the regulators, who worried that companies would use pensions as a slush fund to smooth their earnings, kept them from overcontributing in flusher times. Even before the latest financial crisis hit, the government-run pension insurer estimated that, on average, plans had less than 90 percent of the assets needed to meet their liabilities. Now those figures are much worse, and workers who have been depending on those pensions may see them slashed if their companies go under and the government takes over their plans.”

“Even that dire picture may be too optimistic. Allison Schrager, an economist who designs investment strategies for retirement accounts, recently wrote on The Economist’s Web site that for private pension funds, the equity premium ‘is often assumed to be between 5 percent to 8 percent. In my experience, risk managers go silent when asked where exactly this number comes from.’ If the future equity premium turns out to be much lower than these fund managers are projecting, the funding gap may be too large for companies to make up—particularly since the gap tends to be largest in recessions, when companies are least able to find the money for extra contributions.”

“And yet the private plans are in good shape compared with state and local pension funds. For decades, politicians have promised lavish pension benefits in return for the support of the public-sector unions—promises that they, unlike their counterparts in the private sector, did not have to cover by setting aside a reasonably large asset base. Now the bills are coming due, and many funds are disastrously underfunded.”
The retirement plans of nearly everyone could be devastated by poorly-performing equity markets, but at least there is still social security to fall back on—right?

Social Security was intended to help maintain the incomes of only the poorest of the population. For the rest it will not be sufficient to retain anything like the pre-retirement lifestyle. But even Social Security is no longer safe from harm.
“Not even the federal government is immune to the market’s gyrations. In the three years after the end of the tech boom, federal tax revenues plummeted from 20 percent of GDP to 16 percent. Many people blame the Bush tax cuts for the entire ensuing budget deficit, but in fact they accounted for less than half of the lost revenue. Most of the change from surplus to deficit came from other factors, most prominently from what the Congressional Budget Office calls “technical” and “economic” change: the government simply collected less revenue during the bust than analysts had anticipated. Wealthy people pay most of the income taxes in America. And their taxable incomes are extremely sensitive to the performance of the stock market—not surprising, considering how many wealthy people either work in finance, or receive compensation in the form of stock options.”

“For decades, pundits have been warning that a time would come when Social Security would start to become a drain on the federal budget. Now it’s happening. In 2010, for the first time, payouts to retirees and the disabled have exceeded the program’s revenues from payroll taxes. Infusions from the general fund are now needed if the government is to keep mailing checks—a situation that is projected to become a permanent, and growing, problem by 2016.”

“That means that Social Security, too, is exposed to the performance of the stock market.”
What does this mean? Do we have a handle on the long-term performance of the markets? Might this low-performance era be permanent? McArdle has several thoughts.
“One possible explanation for this pattern is that the equity premium has eroded. Markets have grown more efficient over time, as more and better information—and the computer tools to analyze it—has become available. Meanwhile, the stock market has democratized. Modern diversified portfolios have reduced some of the risk of holding stocks, because even if a few companies fail, they won’t take your entire nest egg with them. Rather, the failures average out with the successes to produce a relatively steady rate of return. As defined-benefit plans—what your grandfather called a pension—have died off, people have poured their retirement savings into mutual funds that offer this sort of diversification. The deeper pool of money flowing into equity markets means that equities no longer need to offer a higher yield in order to attract money from bond and other securities markets.”
These are rather technical considerations—timidly presented. There may be broader social dynamics in play that could be determinative. It is amazing how poorly we understand our own economy. This is an issue that is calling for further discussion, but very little has been forthcoming.

This degree of dependence on an entity as flighty and erratic as an equity market is troubling. Beyond troubling, is the notion that public servants and pundits are arguing that we must immediately respond to 50 year projections when they have no idea what the world will look like 5 years from now. In other words, we appear to be too dumb to make smart decisions now, so let’s show a little caution, or—if you are a pundit—a little humility.

Saturday, January 15, 2011

Is Studying Latin Useful?

Is studying Latin useful? Of course it is! It is about as useful as studying the prevalence of myopia in fruit flies. That comparison was chosen carefully. There are probably a few people per million who would have a valid reason to be concerned with myopic fruit flies. There is probably a similar number who have a valid reason for studying Latin.

On these pages we are normally concerned with matters of life and death, war and peace, and the rise and fall of civilizations. There is a time however when the issue of the efficacy of studying Latin rises to equal importance. That occurs when you are staring into the face of a bird-brained blockhead who smugly refuses to acknowledge the superiority of your opinion. We who are usually correct in our views see this sort of behavior often, and it is rather trying on one’s patience.

I blame it all on the dictionaries. Pick any word and it will likely state that the word is derived from a Latin or Greek word. This leads the poorly educated to assume that Latin is somehow the basis for the English language. Many even assume that English is one of the romance languages. The romance languages are those derived from that of the Romans: Latin. These include Italian, French, Spanish, Portuguese, and Romanian.

The original form of English derived from the arrival on the island of the Germanic tribes: the Angles, Saxons and Jutes. Their languages, mixed with that of the resident Celts, formed Old English. This language further evolved under the influence of various invaders, mainly Scandinavians and the Catholic Church.

The major event in the evolution of the language was the Norman invasion which led to about three centuries of French domination in which Norman French became the language of the upper classes. Old English, as the language of the lower classes shed many of its grammatical complexities and gradually incorporated words from French and became what is referred to as Middle English.

It is estimated that more than a third of English words owe their origin to the French language. One estimate places the number of French words incorporated in English at about 15,000, equivalent to the size of an educated person’s vocabulary. This also means that if an English speaker wished to learn French, about 15,000 French words would be familiar already.

There are a number of reasons people give for why one should study Latin. The most reasonable involve the concept that the best way to appreciate and recognize the structure of your own language is to study another language. This is in fact true, but this could be accomplished by studying French (my favorite path), or Spanish (more useful in this country). It would be a good thing if more people realized that the Spanish speakers, who seem to do most of the manual labor in this country, are actually speaking a much more complicated and sophisticated language than English. It would also be instructive for them to learn that one of the reasons English is so popular around the world is because of its grammatical simplicity.

There are other reasons proclaimed for an interest Latin, such as a desire to appear educated by being able to quote the language. So learn a few phrases and use them! And if you would rather be considered suave and sophisticated instead of pompous and boring, learn a few French phrases and use them.

It seems there has been an upsurge in interest in Latin since the Harry Potter series has become popular. I won’t even comment on that.

So my conclusion is that if you want to learn about language in general, and English in particular, why not pick one of the romance languages. You will learn the same things you would gain from studying Latin, and you would have a working knowledge of a live language.

A disclaimer: I was forced to study Latin (or at least attend Latin classes) for four years in high school. That had no effect whatsoever on my current opinions or outlooks.

Thursday, January 13, 2011

The Coming Battle with Public-Sector Unions

The cover of the January 8-14, 2011 edition of “The Economist” carries the headline “The battle ahead: Confronting the public-sector unions.” The authors correctly point out that most governments face mounting debt problems and commitments to public employees constitute a significant fraction of public expenditures. However, in trying to write a one-size-fits-all article to span the world they end up combining many disparate situations into a single narrative. It is, of course, the conservative, business-oriented narrative.

“Private-sector productivity has soared in the West over the past quarter-century, even in old industries such as steel and carmaking. Companies have achieved this because they have the freedom to manage—to experiment, to expand successful innovations, to close down bad ones, to promote talented people. Across the public sector, unions have fought all this, most cruelly in education. It can be harder to restructure government than business, but even small productivity gains can bring big savings.”
To make everything fit into such a grand summary, one must combine fact with fiction in an appropriate manner. The problems and issues are not as simple as “unions bad,” ‘no unions good.” The lead into the main article does suggest a constructive tone to the considerations which must follow.
“The coming battle should be about delivering better services, not about cutting resources. Focusing on productivity should help politicians redefine the debate.”
The main article cherry-picks examples from multiple countries to illustrate that unions are powerful and members are pampered. The author extracts quotes from disparate sources as to how well life is for the average union member. Many of the comments are directed at the state of affairs in the United States. I cannot speak to other countries, but I can speak to my own.

The author brings up this graphic.

Judging by the title, the author clearly thinks that union membership alone is reason for concern. The public sector and private sector are compared thusly:
“The private sector is dominated by competition and turbulence. Performance-related pay is the norm, and redundancy commonplace. The public sector, by contrast, is a haven of security and stability. Many people have jobs for life and performance measures are rare. The result is a paradox: the typical public worker is better off than the people he is supposed to serve, and the gap has widened significantly over the past decade. In America, pay and benefits have grown twice as fast in the public sector as they have in the private sector.”
Much of the decline in union membership in the private sector corresponds to the Republican-driven goal of destroying the union movement that became so effective during the reign of Ronald Reagan. Since then it has become virtually impossible to get union recognition without the blessing of the employer. Private employers can use techniques of dubious legality that are not available to governments. It is instructive to point out that the decline in union membership in the private sector coincides with the stagnation and then fall in real wages of lower-to-middle class workers. The vaunted productivity gains claimed by the public sector companies owe much to their liberty to cut workers wages at will. It is the task of union representation to keep that from happening. What is good for the company is not necessarily good for the nation.

The author also states that public workers are better off than private workers and pay and benefits have grown twice as fast. That last statement about growth may be true, but consider that pay and benefits growth may in fact be negative in the public sector over the last decade. As for net compensation, the author seems to be terribly confused.
“Evidence from the American Bureau of Labour Statistics support the conservative argument that they have used their power to extract a wage premium: public-sector workers earn, on average, a third more than their private-sector counterparts. Left-leaning economists reply that public-sector workers are, on average, better educated. Whatever the merits of this argument, three things seem clear. Unions have suppressed wage differentials in the public sector. They have extracted excellent benefits for their members. And they have protected underperforming workers from being sacked.”

“Wage differentials are relatively small in the public sector. Lower-level workers, such as secretaries, are usually better paid than their private-sector equivalents, whereas higher-level workers are worse paid.”
Did it not occur to the author that these two paragraphs might be inconsistent? One of the tasks of a union is to make sure that its lowest paid workers earn enough to not starve, and to not have to live under a bridge. There is no such protection in the private sector.

As to the actual levels of compensation, here are the results of a report issued by the Economic Policy Institute (EPI).

Their conclusions:
“Last year, EPI published a paper by Rutgers University professor Jeffrey Keefe, which supplied overwhelming evidence that public-sector workers, on the whole, earn less than those in the private sector.”

“Keefe found that private sector workers earned average annual wages of $55,132, $6,061 greater than the $49,072 earned by public sector workers. When looking at total compensation including employer-provided benefits, this gap narrowed but the private sector workers still earned $2,001 more per year than public sector workers ($71,109 in total compensation, versus $69,108). This gap was especially large among more educated workers.”
So, when it comes to the discussion of public versus private compensation, someone is cooking the books, if not plain lying. Republican presidential candidate (presumed) Mitt Romney has been quoted as saying that “average government workers are now making $30,000 a year more than the average private-sector worker.” So much for honesty in politics!

The real goal will be to break the power of the unions by going after the pension benefits that many public employees possess. These pension commitments are viewed as gold-plated privileges that can no longer be afforded. The question as to their affordability is real; the notion that they are excessive is not. Most of these pension plans are consistent with what was common among private pension plans several decades ago. The real focus should be on why they are not affordable.

Two factors seem to be in play. The first is an apparent short-sighted approach to funding them, or rather, neglecting to fund them out of operating expenses at the necessary rate. Now that budgets very tight there is no way to catch up.

The second factor is the more critical, both for this issue and for the nation as a whole. The future of the nation depends on there being an investment path that can, over the long term, provide a sufficient rate of return that people can supplement their social security income with earnings from investments, pension plans can meet their commitments, and government revenue from taxes on earnings from investments is sufficient to meet the nation’s needs. Now that Social Security payouts will begin coming out of the general fund, even that program depends on investment return.

The stock markets were intended to be that investment path. Pension plans were put in place assuming a 7-8% return. That may appear ridiculous now, but for many years that is what could be anticipated. The markets have been essentially flat over the last ten years. Is that a fluke caused by unusual events, or is this a new normal with which we have to live. With everyone being placed on 401ks now, there is no way they can save enough to maintain a quality life style after retirement without a much higher rate of return.

Public-sector employees have been told for years that low wages will compensated by a healthy benefit package. Let’s not renege on that deal until we better understand our situation. My suggestion is that we figure out how our economy actually works before we begin making changes based on decades of extrapolations into the future. If long-term investing is dead and the only way to make money is by betting on tiny bobbles in asset values then we have much bigger problems than whether public-sector employees are overcompensated or not.
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