Common sense and economic data have tended to diverge when looking at the value of a college degree. In unionized government jobs, such as teaching, the degree credential has obvious value. But what about learning “business” from professors whose only business experience is depositing checks from an employer? Or learning about victimhood from PhD victims? How do these things make a person more valuable to an employer than a smart high school graduate? And how can this learning make up for 4+ years out of the workforce?
Among families whose head is White and born in the 1980s, the college wealth premium of a terminal four-year bachelor’s degree is at a historic low; among families whose head is any other race and ethnicity born in that decade, the premium is statistically indistinguishable from zero. Among families whose head is of any race or ethnicity born in the 1980s and holding a postgraduate degree, the wealth premium is also indistinguishable from zero. Our results suggest that college and postgraduate education may be failing some recent graduates as a financial investment.
This is consistent with the test results described in Academically Adrift: Limited Learning on College Campuses, which notes that the college students who are good at writing and thinking, as measured by the Collegiate Learning Assessment (CLA), are mostly those who were already good at this before they matriculated. The college courses that common sense suggested would be unhelpful were, in fact, unhelpful in moving their CLA scores.
Malcolm Gladwell video (hurts my fingers to type that) discussing research that students who go to elite schools are more likely to drop out of demanding majors, such as science, when they compare themselves to the geniuses in the classroom (i.e., don’t bribe your child’s way into an elite school if you want that child to graduate with a STEM degree)
The automobile market requires high capital investment, yet we don’t see just a handful of almost-identical models taking the entire market. Starting from Android, building a smartphone shouldn’t require anywhere near the investment that is required to build a sports car or niche SUV, but where are the niche phones?
Example: Pilots would surely appreciate a smartphone, maybe Garmin-brand, with built-in ADS-B receiver and AHRS. Now a full backup panel is available at all times. Frequencies for ADS-B are 0.978 GHz and 1.09 GHz, not too different from the 0.8-1.9 GHz mobile phone bands.
Readers: What other capabilities would make good additions to smartphones for niche users? Why don’t these devices exist in the marketplace?
Going to Daytona Beach shortly after returning from Shanghai was a bit of a shock. About a third of the people working in retail stores and restaurants were barely capable of doing their jobs, no matter how simple.
Theory 1: this means the U.S. will have trouble competing with the world’s high-education countries (see “China’s Schoolkids Are Now Officially the Smartest in the World” (Fortune)). Our country is packed with people whose intelligence and education is not sufficient to do the jobs required in an advanced economy, e.g., pour coffee sooner than 30 minutes after a customer is seated in the hotel restaurant for breakfast.
Theory 2: the U.S. economy is so strong right now that all of the decent workers have been snapped up by high-paying employers, thus leaving people who ordinarily wouldn’t be in the workforce to be picked up by desperate service industries.
Supporting Theory 2 is that, even in Daytona Beach, there are some spectacularly profitable enterprises. The luxurious new art museum was funded by J. Hyatt Brown, who made over $1 billion via insurance commissions from an office in Daytona Beach. His collection of Florida-themed paintings contains at least one item that would be considered problematic today:
Readers: What do you think? People who can’t keep a ham restaurant stocked with ham or deliver breakfast in less than one hour at a not-busy breakfast restaurant is a sign of long-term economic health or decline?
Unrelated… Merry Christmas from Krispy Kreme:
Check out the gender balance at the Pokémon card tournament that brought us down to Dayton:
Where are the demands that those identifying as “women” be allowed to participate in this activity, which is surely more fun than coding PHP or C++.
Being a pilot is tough, but someone has to do it… (at Yelvington)
We visited the Daytona Turkey Run and learned something about Family Mobility:
The author continues with his main theme that all of India’s challenges can be attributed to inequality. If only the government were bigger and less corrupt, India would turn into a larger scale version of Singapore. Also, since Hindus are violent and threatening while Muslims are peaceful and threatened, another way to improve India would be for the big government to require everyone to convert to Islam, thus eradicating the scourge of Hindu nationalism.
There is an important message for investors buried in here. The author points out that China is a unique story and investors shouldn’t count on that story being replicated in India. He notes that Brazil was growing wildly and apparently sustainably in the 1980s… and then it wasn’t. An Indian future of overpopulation, pollution, and poverty is at least as likely as a China-like middle class society developing.
When I mentioned this book to a global investor friend, he responded with “India is the most corrupt place that I’ve ever seen.”
Our CIA (a.k.a., “the folks who get everything right”) says that China has a per capita GDP of $16,700 per year (Factbook). Compare to the U.S. at $59,800 or Singapore at $94,100.
But does this attempt simply prove that an economist is someone who knows the price of everything and the value of nothing?
What’s clean air worth to you? In Shanghai this is available indoors to those who buy filtration systems, but walking around in the “fresh air” is not available at any price to residents (an ex-pat friend who has lived there for five years says that the air is much cleaner today than when he first moved in).
How about riding all the way across Shanghai on a gleaming new metro train for $1, e.g., airport to airport? You’re guaranteed never to wait more than 2 or 3 minutes for this train. You can stop into a clean restroom at seemingly every station. This would be a $100 Uber ride in the U.S., e.g., JFK to Newark, and it might take three hours. Can that be factored in? A Suzhou metro ride would cost $50 in the U.S. if the fares had to defray the cost of the infrastructure at U.S. rates (up to $2.5 billion per mile!) and for operation of trains every 3-7 minutes as they operate in Suzhou. Given that the Chinese take a lot of metro rides, do we factor those in as boosting their PPP?
Schools? To send a child to school in the U.S. that offers education comparable to a free public school in Shanghai (World Bank report) would cost $35,000 per year if indeed such a school is available in one’s region. On the other hand, to send a child to a high-quality English-language school in Shanghai costs $50,000 per year(!) according to my ex-pat friend who sends his 11-year-old there (“it is only about $25,000 per year for the international school in Tokyo,” he said, “but the Chinese are willing to pay any price to give their children an advantage so that’s what the market will bear here.”)
Speaking of schools, there is a huge convenient market of after-school activities in shopping malls. These offer gymnastics, dance, English lessons, computer programming, etc. No need to ferry the kids around through ever-worsening traffic in a pavement-melting SUV. Just walk from your apartment to the mall a block or two away. Here was my favorite:
Except for the air pollution, the overall quality of life in the Shanghai/Suzhou/Hangzhou region seems much higher than the CIA numbers would suggest. This is partly explained by Shanghai being richer than average for China (about 2.27X), but not entirely. The relatively high cost of housing in Shanghai alone would absorb most of the income advantage.
JetBlue was honoring Justin Trudeau on the way out (September) …
Nobody who arrives at the Denver Airport in the late evening is going to get claustrophobia:
My experience at the Maven at Dairy Block Hotel proves that nobody older than 40 should attempt to stay at a hip hotel. Although it was Sunday and Monday night when I stayed, there was already a lot of noise from the outdoor dining tables in the alley underneath the room. Airstream and pinball in the lobby:
I did appreciate the room numbers done in nails. Instead of a vat of coffee in the lobby from which you pour yourself as many cups as you want (Hampton Inn-style), you take a coupon for a precious single cup of single vintage drip coffee served by a tattooed and pierced cashier at the artisanal coffee shop within the building:
There is an upscale food court attached to the hotel. If nothing else, it proves an example of the critical difference between possessive and contraction.
We were working near Union Station:
This area certainly won’t win prizes for affordability. We didn’t see a sandwich for less than $13. A haircut from a barber shop, with tip, was $40. The first native-born Uber driver that I met was during the departure ride to the airport (20-minute traffic jam delay at 8 pm). He said “I’ve lived here my whole life, but I can’t afford it anymore. It is like San Francisco. I think I’ll have to move.” Certainly he can be replaced. The sandwich shops were staffed mostly by non-English-speaking immigrants who were receiving instruction in such basic tasks as ladling soup into disposable bowls.
Dinner was a $70 plate of tacos at Tamayo:
After we managed to eat most of these, our local friend gave us a tour of the 16th Street Mall. She knew many of the homeless people we encountered, whose environment was punctuated by video signboards advertising Patagonia, purveyor of $200 down vests. Instead of the garments, however, Patagonia was advertising its brand with a message about climate change:
The good news is that nobody over age 30 is “facing extinction,” according to Patagonia.
(Wouldn’t the actual “climate deniers” be Patagonia customers themselves? Suppose that someone bought a vest for 30 at Costco or $40 at Uniqlo instead of paying $200 for a Patagonia vest. He/she/ze would then have $160-170 left over with which to plant trees ($1/tree in bulk?) to reduce global warming. What is better evidence of climate denial than conspicuous consumption of luxury goods such as Patagonia clothing?)
The Denver Art Museum is mostly closed for a massive renovation. But there is still some great stuff on display. Kids were better dressed in the old days:
I love Nam June Paik’s work, but how can it be maintained? Who has a stock of late 20th century Trinitron tubes?
I thought it would kill on Facebook to write “A big space needs a lot of rooftop A/C.” over a picture of these Donald Judd sculptures.
How wrong I was!
A professional fundraiser was outside seeking donations for bringing more migrants to the U.S. I gave him my standard offer of paying for transportation and food if he wanted to house a migrant in his own apartment. This was refused: “That’s not how we work.”
Inside the museum, an Erika Harrsch installation/video promoting migration:
More exciting for the kids: a 1970 hall of mirrors by Lucas Samaras. The renovated museum will be open in 2022, just in time for Shanghai to have built another Manhattan full of office space.
What do people read in Denver? I visited the Tattered Cover, an old-school downtown bookstore, to find out. “For the sisters, misters, and binary resisters”:
(Will the Mueller Report have to be shredded now that Trump is being impeached from his position as Fuhrer due to Ukraine, not Russia? Or will people still pay to read this in hardcopy? And I would hope that the one thing anyone can learn during National Hispanic Heritage Month is that nobody could ever have too many tamales!)
Denver got quite a bit younger and hipper as I made my way back to the airport. The airport is ready for the Elizabeth Warren presidency. JetBlue, regrettable, is showing movies by a convicted (in New Yorker magazine and on Facebook) rapist. To deceive the woke/outraged into watching Annie Hall, the airline tags it as dating to 2007 (Wikipedia says 1977).
Due to the easy flight connections to Asia and the appeal to the young workers that employers seek, I cling to my belief that Denver was the best choice for Amazon HQ2. At the same time, it seems that any more business growth will be very tough indeed on the lower skill members of the community.
My favorite pictures from the trip are of an app-linked electric scooter tossed into the garbage in front of a micro-brewery. I posted this to Facebook with “Public service announcement: eating avocado toast and steering don’t mix.”
One reason for a $15/hour minimum wage cited by advocates is that current minimum wage workers are generally on welfare (public housing and Medicaid if not also food stamps, etc.) and therefore, the theory goes, the employer is being subsidized by taxpayers.
(How a $15/hour job would lift a household above the welfare thresholds is unclear; in our corner of Massachusetts, a family of four is entitled to housing and/or health insurance subsidies up to $130,000/year. At $15/hour, that’s 167 hours/week, 52 weeks/year.)
I recently talked to the owner of 12 fast-food outlets here in Massachusetts. He is a Democrat and enthusiastically supports the party’s proposals for increasing the number of migrants to the U.S. “Immigrants work harder than Americans,” he said, “who have been on welfare for multiple generations and don’t have a culture of work.” He also appreciates immigrants as customers.
There is one part of the Democrat platform that he does not agree with: the $15/hour minimum wage. “Every time wages go up,” he said, “my employees ask to work fewer hours so that they don’t lose MassHealth [Medicaid].” On his side, he does not want anyone working more than 30 hours per week, the threshold that would trigger a requirement for him to provide health insurance under Obamacare. Out of 160 workers total, he provides health insurance to only 10. “My premiums are sky-high,” he noted, “because we have so few people on the policy.”
(This may show the irrelevance of Econ 101 principles in a half-planned economy like the U.S. Econ 101 says that the higher wage would induce workers to supply more labor hours, not fewer. But Econ 101 never met MassHealth and other means-tested programs!)
Kshama Sawant is running for re-election to the Seattle City Council. One of her campaign posters from August:
From her site:
Seattle needs rent control, citywide and without corporate loopholes, to stop skyrocketing rents. We need to build tens of thousands of units of social housing, paid for by taxing Amazon and big business, to provide a public alternative to the broken private development system. … Meanwhile, skyrocketing housing costs and weak tenant rights laws have combined to lead to an epidemic of evictions. … As a member of Socialist Alternative, I wear the badge of socialist with honor, and I’m excited to see candidates identifying as socialists like Alexandria Ocasio-Cortez winning elections across the country.
What has driven up the cost of housing in Seattle? Maybe it was Sawant herself! Wikipedia says that she migrated to Seattle from India via a marriage to a programmer at Microsoft. “New milestone in King County: Immigrant population tops 500,000” (Seattle Times): “Since the start of the decade , King County has had the third biggest increase in foreign-born residents among all U.S. counties. … That means that nearly one in four inhabitants of the county (24 percent) were born outside the United States, significantly higher than the national average of 14 percent.”
At 7:15 pm on Sunday, October 20 I checked the JetBlue web site for fares to Las Vegas. They were showing a flight leaving in approximately two hours at a fairly high price (roughly double what Spirit charges):
The Mint ticket is especially costly, $1,104, given that there are two seats left and only two hours to go.
Maybe the “Even More Space” seats are not truly empty because JetBlue has sold a bunch of regular price tickets and will have to allocate these at the gate to people who did not pay extra.
But that leaves the mystery of why not sell the Mint seats for closer to the next night’s price of $604. Are two people likely to buy those last two seats at $1,104?
Is this evidence of lack of competition in the airline market? In an Econ 101 competitive marketplace, JetBlue should be happy to sell these last seats at any price above marginal cost (essentially $0 on top of the taxes, TSA, and airport fees).
“How to Tax Our Way Back to Justice: It is absurd that the working class is now paying higher tax rates than the richest people in America.” (NYT) is kind of fascinating for what it says about our media and taxpayer-funded universities.
Emmanuel Saez and Gabriel Zucman, economists at UC Berkeley, figured out that the “bottom 50%” of Americans earn $18,500/year on average and pay a tax rate of 25 percent.
Here’s my comment on the piece:
I wonder if these guys ever leave their offices on campus.
If they were to walk down to one of the less genteel neighborhoods in their fair city of Berkeley they would discover folks who are living in taxpayer-funded housing, signed up for taxpayer-funded health insurance (Medicaid), receiving taxpayer-funded food stamps, and using a taxpayer-funded smartphone.
Unless you’re going to turn all of these noncash welfare programs into some kind of cash income equivalent, there is no meaningful way to calculate the tax rate paid for an American on welfare. Given that 71 million of us are on Medicaid, for example, the numbers presented in this article cannot possibly be correct. The economists have the “bottom 50%” with an average annual income of $18,500. The income limit for welfare in the writers’ native Bay Area is at least $117,400/year (see https://www.mercurynews.com/2018/06/25/the-eye-popping-definition-of-what-is-low-income-in-the-bay-area-increases-again/ ).
Maybe they found some people with a cash income of $18,500, but that isn’t their spending power. If it were, these folks could not afford to live in the U.S. at all (since, if they have a kid or two, health insurance would consume 100% of their income, leaving nothing for food or shelter).
The truly amazing thing here is that middle class Californians are being taxed to fund these two professors!
The article has a lot of information about how the rich are getting richer.
Since it is obviously absurd to talk about the tax rate paid by people who are mostly living on welfare, what could the purpose of the article be other than to sow discord and rage? (the authors hint that they have been advising Elizabeth Warren and presumably would be on track for central planning jobs if she were to be elected)