Our New Country is Going to be Great!

Boomer Elizabeth Warren recently had a hilarious “hello fellow kids” moment.

elizabeth-warren-ewarren-you-deserve-better-dump-the-guy-who-67858483

It’s pretty clear that the 70-year old Warren doesn’t quite understand what “ghosting” is. She, like most of her fellow boomers, probably scratched her head on the dog thing as well. It takes a millennial to grasp the significance of the comment. In Warren’s day you owned a dog if you had a house with a yard. But now there are many millenials want to have a dog if they have roommates living in an apartment. And the dog’s inside 99% of the time, getting all its hair in the carpet, chewing up everything that isn’t locked up. It may seem like a trivial problem but ask millennials and they’ll tell you that it has ruined relationships and friendships when one person says “oh, no, don’t worry, I’ll do 100% of the work cleaning up after the dog…” and then doesn’t do it.

The deeper purpose of the tweet is to appeal to that kind of person who thinks money and debt just falls from the sky on certain people, that they shouldn’t have to take responsibility, that they shouldn’t have to change their behavior to achieve success in any area, others should just make way for them. There’s a lot to be gained, politically, in appealing to these kinds of people, along with those who resent them. The latter kind of politics would be a lot more effective if it wasn’t wedded to a belief that everyone who has a billion dollars personally created a billion dollars in wealth. There’s a lot of low-hanging fruit for the politician who appeals to reduce taxes on the ordinary wage earner, the person who saves and invests and generally behaves responsibly, while also stating that the billionaires aren’t that much smarter or hardworking than the guy making an upper-middle class income, that they just won a winner-take-all game.

Practically speaking, what if you’re the person who has a kid about to go to college next fall? You behaved responsibly, saved your money, lived a bit less than the Jones’. Your kid doesn’t need student loans, but now you’re thinking that there’s about a fifteen percent chance that he could take them out and then before he ever makes a single payment… poof, the debt is wiped clean, and the money you would have given to your kid’s school is in your pocket, you can give it to him just as soon as he gets out of college, give him a head start on adult life. If not, give him the money and tell him to use it to pay down the loan.

You may argue the probability of it happening is much less than twenty percent. I don’t think so. PredictIt currently has the combined probability of Warren and Sanders winning at ~20%. I think they are even more likely to win than that, as is Biden, with Trump much less likely.(I put my money where my mouth is and bet against him) If they do win, what’s the chance they pass student loan debt forgiveness? Low in the immediate aftermath, as the Republicans will probably(~70%) retain control of the Senate. But there will be further elections and Republicans will be confronted with this promise. What will they have to combat the Democrats’ promises? People point to the wokeness stuff, but a lot of that is emanating from corporations and the modern Republican party has no answer to it, none. They just whine and don’t do anything.

You sometimes hear from certain “center-Left” or “fiscally conservative and socially liberal” people that, yes, that creates a moral hazard, yes, that’s crazy, yes, money doesn’t grow on trees, but that’s just an extremist minority of the party, pay no attention to them. It’s not. It’s not even an extremist minority of Americans. 57% of Americans support student loan forgiveness, 72% of Democrats do. That number will probably come down in the future if the case is made against it, still, 72% is a big number. And those center-Left democrats are making pretty low-energy arguments. “We can’t afford it,” “Bernie will lose to Trump.” The center-Left people refer to “moral hazard” in an abstract sense hoping their less intelligent blue tribe comrades won’t understand what it means. They aren’t going to make high-energy attacks on irresponsibility and shortsightedness. That would be mean, and it’s important for this demographic to be seen as nice. Call ’em the silent minority.

The time-frame that matters is ~2020-2028. If your kid plans on going to college from fall of 2020 to spring of 2024, anytime in that range and you’re set. Outside that range and he may have to pay a few years, less if he can delay the onset of payments by attending graduate school. I say that the probability that a student loan made by the federal government which disburses in the fall of 2020 is wholly cancelled between January 20, 2021 and January 20, 2029 is 20%. If there is means testing and a loan cap as Warren proposes, the prediction is still correct so long as the majority of borrowers get their debt wholly removed.

 

Exile Ghettos as an Alternative to Incarceration

The debate around ideal incarceration levels comes down to the tradeoff between the harms of depriving prisoners of liberty and the harm of subjecting the general population to their predation. What if there was a way to keep the general population safe from their predation while giving certain prisoners most of their liberty?

First, take underdeveloped land somewhere reasonably close to a major highway and eminent domain the existing residents, then surround it with a barbed-wire electric fence and guard towers, like your typical prison. Developers are told to turn the land inside into a city, businesses are told to build factories, call centers, ect. in the ghetto. Prisoners are confined there and guards prevent weapons from entering the area, but otherwise nothing much changes: prisoners are free within the confined area, outsiders and come and go as they like. The guards would double as a local police force. There’s no getting around the similarity of this to the Holocaust ghetto. There are about 1.5 million people in state and federal prisons today, supposing half qualify for transfer, you can fill an “exile ghetto” with 750,000 people. One large ghetto is better than several small ones, as area rises faster than circumference, saving on fencing costs, and a larger ghetto will benefit from economies of scale.

How is this different than a prison? Ghetto inmates can eat whatever they can afford to buy, work for whoever is willing to employ them, live wherever they can afford to pay rent. If inmates’ families were willing to do so, they could move to the ghetto. Inmates might suffer poverty and unemployment, but it would be the same kind of poverty and unemployment they’d suffer outside the ghetto. The ghetto would restrict their mobility(quickly developing tragic dirt) and they would have to pay higher prices for goods brought into the ghetto due to the expense of searching for contraband and the reluctance of outsiders to do business inside the ghetto. If the government was feeling generous, it could give a meager universal income to the inmates to offset these costs, a quite small expense compared to the cost of conventional incarceration. There’d be a lot of violence within the ghetto, but it would be directed against other criminals and those non-criminals who choose to take on the risk of living there, the general population would have nothing to fear as they would if criminals were simply released. The ghetto might be criminogenic for some of its inmates as they’d be affected by the culture of violence inside the ghetto, but the same can be said for modern prisons. It’s hard to argue that inmates would prefer prison to the ghetto, if they did, they could always be granted the opportunity to serve their time in a standard prison if they chose.

This would make “incarceration” much cheaper, and when you make something cheaper people buy more of it, tempting states to “incarcerate” more people and for longer. Might this be a decent trade-off, longer sentences in a much better environment? If not, the federal government could respond by charging states far more than it really costs to send prisoners to the ghetto, to avoid overuse.

A New, Different Kind of World

Bernie Sanders wants to reduce student loan interest rates from the current 4.5-7% to 1.88%. If this happened, student loans would become the bank for all kinds of transactions. Why get a car loan when you could just get a student loan and buy a car outright, effectively reducing your interest rate greatly and avoiding the possibility of your car being repossessed?

Screenshot-2015-12-29-17.17.33.png
Bernie displaying typical economic illiteracy. 

And how about borrowing to invest? Did you know that it’s only a “legal gray area” to invest your student loans? Presumably they’d crack down on it, but there’d be ways around it.

  1. If you’re living with your parents and benefiting from the imputed rent tax loophole, pay an artificially low rate of rent to them, who will then invest the money and return it to you later. It must be artificially low so that they can deduct the cost of maintenance, depreciation, and property taxes from the amount you pay and avoid it being taxed as income. So long as you don’t put it in writing this should be quite safe. You, being a responsible adult, will pay rent and they, being generous parents, allow you to pay less than the market rate and will help you out when you need it later.
  2. If you have an existing car or home loan, refinance so that in effect you are paying a higher rate while in school and will be rewarded with a lower rate after you get out. Effectively, you are borrowing from the government in order to give money to the banks, who invest the money and return the gains to you in the form of lower payments later. Since the banks already know who you are, transaction costs would be minimal.
  3. If your parents are giving you money, have them stop, invest it, and give it to you later. If they gave you money in the past, decide that was a “loan” and use the student loan to “pay it back.”
  4. Life insurance today functions as a tax shelter, and could function as an investment shelter. Of course college students are young and won’t be very motivated to seek an investment which only pays off after their deaths. Health insurance is already so subsidized that it would be unprofitable to try to use it to game the system.

An Unintentionally Great Article About UBI

The Washington Post has an unintentionally great article about UBI. The first problem with the article is the use of the word “UBI.” It seems that while “UBI” is still relatively unpopular, it’s more popular still than “expand the welfare system,” so many of the people who want the latter like to call it the former. In this case, an experiment targeted specifically at low-income mothers is referred to as a “universal basic income,” with the experiment supposedly a test of UBI. The program is closer to UBI than most current welfare programs, but cannot be a test of UBI as its recipients are a heavily selected group. The general tone of the article is that the experiment is successful, with the recipients making progress out of poverty. Still, there were some concerns:

In Jackson, Gray just wanted to escape poverty. She had grown up poor and was pregnant at 16, which is when she started hearing people say she’d “never become nothing.”

“I wanted to show I could do it all on my own,” she said.

She tried to defy the stereotypes by staying in school and going to Jackson State University. Her bachelor’s degree in social work led her to $40,000 in student loan debt, a busted car and a cleaning job that paid no more than $11 an hour.

{snip}

Then there was Gray’s own education. She told the social worker it was still too expensive to carry out her plan to go to school full time. And there was no time to take classes when she was still working two jobs.

“Maybe you should just take a course,” Johnson suggested.

“Okay,” Gray said, looking away.

“You’re saying okay, but your face is not saying okay.”

“I just think school is down the road,” Gray said.

Gee, I wonder why she isn’t too enthused about getting another degree? Could it have something to do with the fact that her first degree didn’t give her any benefits? Not only did her degree in social work fail to get her a job, it couldn’t even keep her from requiring the aid of a social worker. No, it must be due to an irrational hangup, effects of poverty, we just need more social workers and more “education” to get her to see the light!

The fears some people have that recipients will not use their money wisely are not groundless, but they ought to be balanced against the likelihood that if you empower bureaucrats to make paternalistic decisions for people, they’ll just waste the money by imposing with their own ill-informed ideas of “how to escape poverty.” The poor person who receives money is unlikely to be a genius, but has an incentive to spend it wisely. If he wastes it, he’ll be miserable. But if the bureaucrat oversees a program which wastes money, nothing bad will happen to him. He’ll just pat himself on the back for caring about the problem and trying to solve it, and will attack critics for heartlessness.

Blue-Bloods

In the past it was believed that there was something magical about Royal blood. There was a bit of selection here and there, duller royals may have gotten killed off, but the same moderate selection happened to the peasants. In fact, as an ethnic group royals should have enjoyed relaxed selection.

One could imagine that the Royals, once freed from endogamy, could have become “cognitively elite” through selectively mating with very smart, very capable commoners. You sometimes hear it alleged that billionaires are doing this, becoming a kid of “cognitive elite.” There’s little sign of it. You can imagine a world in which the CEOs raid the physics departments looking for the smartest women so their kids would be super-smart, but in the real world they just seek out women who look good and are reasonably intelligent and successful.(College degree and no visible tattoos) Rich movie stars, musicians, and those with inherited wealth don’t seem to care about intelligence in their partners at all.

Despite their non-magical origin, the English prohibition on divorce has functioned as a kind of eugenic selection mechanism for its royal family. Divorce correlates with all kinds of social maladies, and its prohibition provided a floor, albeit not very high, that kept certain characters out of the royal bloodline. Wallis Simpson could not join, Edward VIII who insisted on marrying her had to go. When Princess Margaret, the Queen’s younger sister, wanted to marry the divorced Peter Townsend, the church refused to marry them and she broke off the relationship. Had it not had this prohibition, Britain would have to suffer several decades of the moron Edward VIII before the throne passed to the irreproachable current Queen. And had they continued the prohibition, Charles, with his homeopathic medicines and other associated stupidity, would have been excluded due to his divorce. But Britain grew out of that and now the Royal family, the uber elite among the uber elite, are just an average family, with your typical average family dramas. A year and a half ago I predicted that Prince Harry and Meghan Markle would wind up divorced, and so far I think they are well on their way to that destination.

What’s the solution? Britain’s not going to go back to the old situation. But it could get rid of the monarchy after the Queen dies. The British right should lead the charge. I’m afraid though that they are too spineless to do so.

#WithoutMe

When groups bang themselves on the head with a hammer, it results in a (relative) benefit for those which don’t do so. America derived a (relative) benefit from China, India, and Eastern Europe’s collective banging on the head with a hammer. When they ceased to do so, a lot of American manufacturers went out of business.

For the last few generations, the Democrats have favored more regulation of housing, like everything else. Basic economics tells you that when you restrict the supply of something, the price increases, and the result was a mass migration away from much of blue America:

us internal migration

What if they ceased doing so? Ygelsias explores the question in a recent article. What if furthermore some Republicans decide that since the Democrats have put down the hammer, they should pick it up? See this article by Paul Kersey for an example. The comment section shows some rather astonishing stupidity, with several commenters calling it “communism” that property owners would have the right to build duplexes on their own f***ing property. If you ever wonder why VDare doesn’t have a comment section, read that thread.

This may not happen. The Leftist anti-zoning movement may fizzle out or be transformed into one which replaces dumb regulations with even dumber regulations. But what if they don’t? What if they trigger a “roaring twenties” in the urban core as housing suddenly becomes affordable again? And what if the Republican party becomes the party of artificial housing scarcity? Well, they can do it #WithoutMe. This is not due to any particular free-market views, I would welcome things like higher taxes on the rich. I just don’t want to give half my income to my landlord.