All of nothing on immigration = failure

Kudos to Senator Marco Rubio for this insight:

“A comprehensive, single piece of legislation on any topic, but especially on immigration, is going to be very difficult to achieve,” Rubio, a potential presidential candidate, said when asked whether he’d push a large overhaul in the 2015-16 session. “We keep talking about the same issue now for 15 years, and everybody is doing this all-or-nothing approach. And all-or-nothing is going to leave you with nothing.”

Read more: http://www.politico.com/story/2014/05/immigration-bill-congress-obama-106467.html#ixzz31FCOUI4k

As I have been saying for some time, “comprehensive” in Washington is code for grandstanding.  I want a bill, not an issue. So do the vast majority of Americans, but unfortunately this is a minority position in DC — in both parties.  Rubio is not only on the right side of this issue, but he’s smart enough to have decoded the Senate’s machinations.

Low-hanging fruit abounds

This is a chart for the Cowenists – believers in my friend, Tyler Cowen’s, vision of technological progress slowing because humans have already reached all the low-hanging fruits of innovation. I’m of the belief, to borrow his metaphor, that growth means we are getting taller with each invention, making the higher fruit more accessible. What hath the computer wrought? Greater reach for inventors! A democracy of information!

Consider the amazing diffusion of smart phones, from Pew:

Figure 1

In TWO years, the percentage of people with No Cell Phone was cut in half, down to a level where choice, not income, was probably the deciding factor. The non-adopters are overwhelmingly elderly.

I think Tyler would agree that this is impressive, and maybe dents the pessimists’ case (and he is far more nuanced than the anti-progress pessimist). Nonetheless, I think this chart does much more violence to the Piketty argument that inequality is the defining issue of our time. Hogwash. The young are significantly lower-income than the elderly, yet they have much higher ownership rates of the most amazing piece of property ever, a tangible thing of monstrous value that did not exist half a generation ago.

If mind-blowing, inexpensive, mass-market technological property is the fruit of inequality, then let’s have more. No?

Inequality is (Relatively) Unimportant

I am inspired and bemused by the intense interest in Thomas Piketty’s book Capital in the Twenty-First Century. The formula for becoming the top-selling book (including fiction) in the modern era appears to include these core ingredients:

1. Load with rich, rock-solid historical data about something of keen interest along a political fault line. (In Piketty’s case this data is about income inequality, wealth inequality, and capital).  

2. Write hundreds of pages about the data using tones of caution and care about interpretation.

3. Conclude with wild claims, both about things related to the data as well as things unrelated to the data.

What is bemusing is how the assertion that inequality is “dangerous” has been allowed to run wildly through educated discussion. Do a Google search and you find pamphleteering, not economic science (witness this DeLong link) Maybe it is true, and if it is true, sign me up to stop it.  But is inequality actually important, dangerous, or significantly correlated with something, you know, real?  How does inequality rank against very tangible and measurable ills in our world: child mortality, deforestation, AIDS, slavery, or poverty? Here’s a hint: according to Gallup’s classic “Nation’s Most Important Problem” question, inequality has a mere 3 percent score, and it seems to have been that way for many decades. Inequality just does not rate as a real problem compared to unemployment, growth, health care, education, and honest to God poverty.

Piketty and his apologists assume that inequality matters. Is there any evidence to support the assumption?  Is there, say, a correlation in panel data of nations in Europe over a hundred years between wealth inequality and child mortality? Is it lagged, conditional on income levels and other things? Better yet: Is there a threshold to inequality, where it becomes dangerous above (or below) some Goldilocks zone?

Recall just last year when critics went ballistic over a Reinhart and Rogoff claim about the relationship between national debt and slower GDP growth. There was a 90% threshold  claim, such that debt above that level was dangerous, and some scholars found an error in the data about that threshold (but not the linear relationship) which was then the basis for a full-on paranoid liberal freak-out. As RR noted, even their critics found the same negative relationship between debt and growth, but merely challenged the threshold.

Now contrast the RR debate with this one. Piketty doesn’t even pretend to establish a relationship between inequality and something real.  Imagine Reinhart and Rogoff writing a massive tome and concluding with:  “____ is desirable up to a point. But beyond a certain level it is useless.” or “History suggests that this kind of _______ level is not only useless for growth, it can also lead to a capture of the political process …” which is exactly the ambiguous kind of assertion Piketty gets away with in interviews

I care deeply about poverty; it’s why I chose to study economics. Poverty is real. Inequality is a false idol. Those like Piketty who wish to make it the defining issue of our time have a burden to prove why democracy should shift resources away from other battles against disease, poverty, and pollution. It absolutely must be noted that one of the trade-offs a “war on inequality” will extract is a vast reduction in the number of legal immigrants — one million foreigners legally move to the U.S. under current law, but the Piketty war would drop that by 900,000. “Huddled masses yearning to breathe free?  Sorry, no more space for inequality.” Piketty’s agitation fuels the nationalist sentiment.

If the inequality alarmists cannot substantiate the “danger,” then they stand guilty of empty  ideological posturing.

Google, Women, Immigrants, and Lazlo Bock

I had never heard of Lazlo Bock until yesterday, when he and his work were recommended to me twice. Once at breakfast with some friends who are executives in Bay area startups. Then a few hours later, over coffee with a high-profile HR executive and scholar. Those of you who know that my own research into military leadership in particular, and organizational structure in general, can understand why Bock should have been on my radar before, and is very much on it now.  Bock is doing some very interesting things at Google, things that I think the Pentagon should be watching:

Google data-mines its approach to promoting women (WaPo, 4/2/2014) Don’t neglect the Q&A.

In the U.S., two-thirds of computer science degrees are awarded to non-U.S. citizens. They graduate and immediately go back to their home countries because we can’t keep them. Why not keep that knowledge, drive and passion here?

Bock’s own words (a Google ThinkInsights essays from 2011)

And if you think about it, if you’re an organization that says ‘our people are our greatest asset,’ you must default to open. It’s the only way to demonstrate to your employees that you believe they are trustworthy adults and have good judgment.

gDNA described by Bock (HBR essay)

People Science needs to be adaptive. By analyzing behaviors, attitudes, personality traits and perception over time, we aim to identify the biggest influencers of a satisfying and productive work experience. The data from gDNA allows us to flex our people practices in anticipation of our peoples’ needs.

Fivers

George Will recommends a path toward a balanced budget amendment to the Constitution. Using Article 5, the states can make this happen even if the Congress refuses to act.

Congress, which relishes deficit spending, would not, unilaterally and unpressured, send this amendment to the states for ratification. Hence theGoldwater Institute’s recourse to Article V.

It provides, in the same sentence, two amendment procedures, one of which has never been used — the calling of a convention by two-thirds of the state legislatures. Many prudent people — remembering that the 1787 Constitutional Convention’s original purpose was merely to “remedy defects” of the Articles of Confederation — recoil from the possibility of a runaway convention and the certainty that James Madison would not be there to make it turn out well. The compact, however, would closely confine a convention: State legislatures can form a compact — a cooperative agreement — to call a convention for the codified, one-item agenda of ratifying the balanced-budget amendment precisely stipulated in advance.

SecDef Gates: “I should not have allowed it.”

Near the end of his book Duty, the former Secretary of Defense Robert M. Gates offers a strong criticism of the personnel system. Even many authorities who work on personnel issues may not be aware of his opinions on this topic, oversahdowed by other, flashier observations about the presidents he served, the wars he helped fight, and the culture of Washington. But this is the most interesting stuff he has to say, in my opinion:

Over the ten years of the Iraq and Afghan wars, too many officers were assigned to command positions because the stateside personnel system identified them as “next in line” rather than because they were selected as best qualified for the combat mission.  And too many talented officers who achieved real battlefield success were rotated out of command in Iraq and Afghanistan too soon simply to keep the personnel system running smoothly.  When we are in a fight, field commanders and the combatant commanders should be given the authority to relieve underperformers or keep good officers in command.

There’s more, but let’s stop and analyze how radical a proposal is being made here.  The key fact is that, as a general rule, military commanders do not have authority to hire, retain, or dismiss their own people. That is something men and women in uniform take as natural, but it is astounding to civilians. To outsiders, the dysfunction this invites is obvious, and not just for current military operations. Think for a second about the culture clash when troops leave the service and seek employment in the real world. They are totally unprepared. I can vouch for this among my friends of high rank and extraordinary accomplishment in uniform: the civilian job market is like the vast territory that is blank on their maps.  Is it any wonder the unemployment rate is high for veterans? Consider this from GEN James Jones (USMC ret) and Dan Goldenberg:

Nine percent of Gulf War-era II veterans remain unemployed, according to statistics released March 20 by the Bureau of Labor Statistics (BLS). … The unemployment rate for veterans remains higher than for America’s non-veteran population, and 21.4 percent of the youngest Gulf War II veterans (ages 18-24) remain unemployed. And much of the problem lies in a failure to connect veterans to the right employment services in the right place at the right time.

Everyone know this is a scandal, but Jones and Goldenberg are neglecting the fact that “employment services” cannot remedy a paternalistic employment culture after the fact. Until command authority for managing talent is restored in the military, troops will continue to pay the price later in life, no matter how superb the out-briefing.

Now back to Bob Gates:

In wartime, I believe the routine peacetime officer-assignment process should be set aside and senior field commanders should be empowered to choose their subordinate commanders. The failure to do this was, in my view, consistent with the peacetime mentality that pervaded the entire Defense Department, business-as-usual the order of the day among senior civilians and even among most generals and admirals, even as the troops were fighting and dying. I should not have allowed it.

I really admire Gates for writing these words. I think he can be forgiven for focusing on war strategy and not personnel structures, but I dearly hope policymakers listen and act on this call. The only question that remains is why we should limit this proposed management authority to wartime?  Why limit it to senior commanders? Why exclude the centrally planned markets for enlistees and non-command officers?  The same dysfunctional principles haunt the whole gamut of people in a profession that has the pretense of saying that it puts people first.

Many, many, many uniformed officers know this. They want to fix it. The final irony is that the rapid rotation culture edges senior officers out of power just as they figure out how the system isn’t working.

Supreme Court Restores Free Speech, in Pieces

Today the Supreme Court ruled to overturn a bit more of the labyrinthine regulations on Americans’ right to free speech. This subject is often accompanied by loud gnashing of teeth, but today’s ruling (McCuthcheon v FEC) is actually a tiny step. In fact, the 5-4 decision pulled its punch, meaning that fully free speech is still illegal in the United States, and what a shame that is.  Let’s remember that it was once the ACLU that was defending the freedom of a small group of Americans who ran a newspaper advertisement against Richard’s Nixon’s bombing of Cambodia. The ACLU (back when it care about free speech) said that so-called campaign finance “reforms” were a euphemism for speech control.

Let’s dispense with the usual misleading claims:

1. Campaign Finance rulings give a partisan advantage. Protesters think this a Republican versus Democrat issue.  It’s not.  The campaign finance laws are fundamentally about politics works mechanically, and both parties get equal treatment regardless of the Supreme Court decision. What’ in tension is whether the two major political parties have monopolistic control over campaign dollars. They both prefer such control, but this comes at the expense of outside voices (Tea Party as well as Green) and at the expense of entrepreneurial candidates. Today’s ruling is a small victory against the big parties.

2. Money is not speech. Okay then, the control money crowd says that they reject the very idea of money as speech. They say money is de facto corrupting.  This latter point is what gets them into constitutional hot water because it is baseless, presuming guilt before innocence. The “appearance of corruption” standard is no better than incriminating a young girl for prostitution because of the clothing she wears. Do we put people in jail for the “appearance of prostitution” or the “appearance of manslaughter?” To say this is a superficial standard is so accurate that it insults common sense. And as you might expect, the net result after decades of superficial control of politics is our modern, very superficial politics.

To continue the illogic of the critics, let’s think about the speech standard as applied to the New York Times.  The campaign finance dinosaurs hold that 100 pages of a newspaper cannot be regulated because that is free speech, but a 1/16th page advertisement in that same paper is subject to superficial standards, intrusive regulation, and outright banishment. So if a rich Saudi wants to publish and distribute a newspaper in the U.S. calling for jihad, he is free to say what he wants, but if an American wants to pay for a small “Vote for Kane” ad in the Washington Post, that is a thought crime! This is madness.

3. The open door will become a floodgate.  The bogeyman of money buying politics has been a staple of media reports about U.S. politics forever. Even now, Senator Harry Reid is using the Senate to attack individual Americans by name who dare to give money to his opponents. Yet the supposed “flood” of corporate money after the 2010 Citizens United case failed to, you know, flood. Where’s the story about Exxon or KFC dollars gushing into candidate or PAC accounts?  It never happened.  Instead, the angst is all about the Koch brothers or George Soros. Individuals. Not corporations. The reality is the individual right has never been subject to control by the FEC, and so there’s nothing new with Koch or Soros giving.

Why don’t for-profit corporations flood in?  Because it never really made business sense for public corporations to buy politicians, and so it, contrary to the hopes and dreams of professional angry anti-speech activists, just didn’t happen even after Citizens United allowed it.  Look up the 2012 donation records: no flood.  Non-profit giving is a different story, but that wasn’t torrential and besides, it’s hard to demonize.

Of course, that doesn’t stop the myth of the corporate flood from being repeated. Consider this line, common everywhere, but frustrating to see on the ultra-mainstream CNN today, in this lead story “SKY’S THE LIMIT” :

The Citizens United ruling helped open the floodgates to massive corporate spending in the 2012 elections.

Ultimately, McCutcheon is not nearly as important as Citizens United was, nor does it resolve the biggest restriction on political freedom, which is the freedom of individual candidates to raise unlimited sums from individual donors.  That restriciton, known as “base limits”, continues to hamstring political entrepreneurs.  Mr. McCutcheon, for example, has a base limit of $2600 maximum that can be given to an individual candidate, as well as an aggregate limit of $123,200 per cycle.

To be sure, incumbents can raise unlimited money because they are expert at direct mailing tens of millions of small donors, working back-scratching PAC networks, and milking their big party patrons. An entrepreneur has limited resources, but may have the backing of a visionary investor. But one or two high-net-worth donors cannot, still, give a big check to candidate X. Why? Hamstringing the entrepreneur remains.

At first, I thought SCOTUS had split the baby by just removing the aggregate limit but leaving the base limit in place. To my relief, Justice Roberts explained in his opinion that

This case does not involve any challenge to the base limits, which we have previously upheld as serving the permissible objective of combatting corruption.

That base limit case will come, but it cannot come soon enough.