Tuesday, January 31, 2023

Free to Choose

The madness about equity and diversity has come to infect American medical schools. According to the Wall Street Journal, major medical schools will no longer base admissions on merit, but will admit or reject applicants on the basis of equity.

So much for following the science.

So, medical schools will be training certain people who cannot do the work. Not only that, but they are advertising it.

Do a thought experiment. Imagine that you are choosing a surgeon to perform a difficult and complex operation. If you manage to have a choice between a doctor you believe was admitted to med school for his superior capacity for empathy and his superior feelings about the downtrodden of the earth and a doctor who you believe is the best surgeon around, which would you choose?

Or better, how can you tell? Call it the working of the free market.

That is not a trick question-- but it draws attention to a point made by Shelby Steele more than two decades ago-- namely that diversity quotas diminish the achievements of all minority candidates.

Critical Race Theory

Famed jurist Richard Posner offered this analysis of Critical Race Theory, in 1997:

By exaggerating the plight of the groups for which they are self-appointed spokesmen the critical race theorists come across as whiners and wolf-criers. By forswearing analysis in favor of storytelling, they come across as labile and intellectually limited. By embracing the politics of identity, they come across as divisive. Their grasp of social reality is weak; their diagnoses are inaccurate; their suggested cures (rigid quotas, 1960s-style demonstrations, transformations of the American spirit, socialism, poverty law practice) are tried and true failures. Their lodgment in the law schools is a disgrace to legal education, which lacks the moral courage and the intellectual self-confidence to pronounce a minority movement’s scholarship bunk.

Monday, January 30, 2023

Too Little, Too Late

One suspects, as a general rule, that when the Biden administration engages in tough talk, it is mostly just talk.

Such is the case of the president’s declaration that he is going to send some serious tanks to Ukraine. As Stephen Green points out, it is too little, too late. Besides, we do not even have the Abrams tanks that we are going to send-- it will take months to manufacture them.

It’s big news when Western tanks like the mighty American M1 Abrams, the German Leopard 2, and the British Challenger 2 will be sent to Ukraine to bolster that country’s defending armored forces.

But is this a case of too little, too late? It very well might be.

The numbers of heavily armored, high-firepower vehicles being made available to Kyiv are hardly impressive.

As for NATO allies, the story is not any better:

You can excuse the British for sending only 14, even though that’s only enough to arm a single tank company with zero replacements. The Brits were never able to find a significant export market for the Challenger 2, despite its impressive features and performance. So only around 450 were ever built, mostly for use by the British Army.

Berlin, despite having manufactured thousands of highly regarded Leopard 2s for domestic and export use, has also promised to deliver a mere company’s worth of tanks. Ditto Poland. They’ll send another company’s worth of Leopards they purchased to replace many of their Soviet-era tanks left over from when they were still a Soviet client state.

The Leopards will hopefully arrive this summer, complete with all the munitions, spares, training, etc. that turn a collection of men and gear into a real fighting force.

Poland is also sending its much-upgraded T-72s — called the PT-91 Twardy — in much greater numbers. Warsaw announced Kyiv would receive 60 of them, and in relatively short order.

Spain, Finland, and Norway have also announced they’re open to joining in, but have been coy about how many tanks or when.

Most curious is the United States. The Biden Administration announced a gift of 31 M1A2 Abrams, which sounds like a more generous donation than any other country — but they might not arrive for a year.

As for America, we are not sending our best tanks:

Biden chose not to deliver the most modern version of the M1 — the M1A3 — for legitimate concerns that the Russians would capture at least one and learn some of our most sensitive technologies and other secrets. But instead of sending older M1A1s out of our retired stocks (which are plentiful), Biden decided to send the in-between M1A2.

Those will have to be manufactured fresh, minus the super-hard depleted uranium armor, just for Ukraine. This decision seems stupid, so very stupid, to me.

Apparently, the war is not going very well for the Ukrainians. What would it take to improve circumstances?

To make a real difference — to turn the Ukraine Army into a genuine armored maneuver force capable of rousting the Russians — experts estimate the country would need 300-500 Western tanks. That’s enough to equip a reinforced armored division, but the qualitative edge over Russian numbers would likely prove decisive.

Of course, many foreign policy hands are lauding the Biden administration approach, even if it more show than substance.

Instead, Western indecision has allowed Moscow to determine the terms and pace of the war, and to define what counts as “escalation.”

So, it looks like a great failure accompanied by a cover-up. Besides, don't you get the impression that people are getting a little tired of Ukraine and its president, who appears more and more to be a beggar?

Sunday, January 29, 2023

The Urban Doom Loop

Here is a new concept-- the urban doom loop. As explained by Thomas Edsall it means that America’s great blue cities are losing population and are losing small businesses. In addition, they are losing restaurants and shops. It’s easy to blame it on the virus, but more and more people are exiting these cities, to find a safer, more tax friendly environment down South. Obviously, this impacts office buildings.

Edsall writes:

As the pandemic endured and subsequent coronavirus variants prompted employers to postpone return-to-office plans, Van Nieuwerburgh noted, “Covid-induced migration patterns began to take on a more persistent character. Many households transitioned from temporarily renting a suburban home to purchasing a suburban home.”

In Van Nieuwerburgh’s view — and that of many of his colleagues — what seemed like a transitory step to avoid infection has become a major force driving the future direction of urban America.

And let us not forget the crime wave, brought upon us by leftist prosecutors:

Scholars are increasingly voicing concern that the shift to working from home, spurred by the Covid pandemic, will bring the three-decade renaissance of major cities to a halt, setting off an era of urban decay. They cite an exodus of the affluent, a surge in vacant offices and storefronts, and the prospect of declining property taxes and public transit revenues.

Insofar as fear of urban crime grows, as the number of homeless people increases and as the fiscal ability of government to address these problems shrinks, the amenities of city life are very likely to diminish.

Here is another take on the problem, emphasizing the impact of crime and homelessness:

Jacob Brown, a postdoctoral fellow at Princeton’s Center for the Study of Democratic Politics, elaborated in an email on the consequences for cities of the more than 20 percent of urban employees now working full or part time from home:

With respect to crime, poverty and homelessness, Brown argued:

One thing that may occur is that disinvestment in city downtowns will alter the spatial distribution of these elements in cities — i.e. in which neighborhoods or areas of a city is crime more likely and homelessness more visible. Urban downtowns are often policed such that these visible elements of poverty are pushed to other parts of the city where they will not interfere with commercial activities. But absent these activities, there may be less political pressure to maintain these areas. This is not to say that the overall crime rate or homelessness levels will necessarily increase, but their spatial redistribution may further alter the trajectory of commercial downtowns — and the perception of city crime in the broader public.

Arpit Gupta of N.Y.U.’s Stern School of Business, Vrinda Mittal of the Columbia Business School and Van Nieuwerburgh…. anticipate disaster in their September 2022 paper, “Work From Home and the Office Real Estate Apocalypse.”

“Our research,” Gupta wrote by email, emphasizes the possibility of an “urban doom loop” by which decline of work in the center business district results in less foot traffic and consumption, which adversely affects the urban core in a variety of ways (less eyes on the street, so more crime; less consumption; less commuting) thereby lowering municipal revenues and also making it more challenging to provide public goods and services absent tax increases. These challenges will predominantly hit blue cities in the coming years.

Shall we say, it is not an especially optimistic forecast. Stay tuned.

Saturday, January 28, 2023

Socialized Medicine in Practice

America’s young socialists, impervious to reality, want to offer us Medicare for all. Since the current Medicare is bankrupting the country-- meaning, we cannot afford it-- they postulate that we need more of it. It’s called free lunch-- with no sense whatever of where the money is coming from.

Were you to suggest that their dream is wildly unrealistic, they will trot out the example of the British National Health Service. You recall the 2012 London Olympics where Once-Great Britain offered up a song and dance routine with hospital beds and doctors.

Unaffordable health care will inevitably be rationed. People will go without it. This report sums up the problems in today’s Britain:

According to the BBC, there are 7.2 million British citizens awaiting medical care, or almost 11% of the entire British population. And Sky News reports that more than 400,000 people in England have been awaiting hospital treatment for more than a year.

Right now, the most salient problem is emergency care.

According to The Telegraph, December data show that people suffering a heart attack face an average wait of 90 minutes for an ambulance, with some waiting up to two and a half hours. For emergency care, The Telegraph further reports, 55,000 people were forced to wait on hospital gurneys for “at least” 12 hours following emergency department decisions to admit them.

Of course, patients suffering from a stroke or a heart attack are always in a race against time, as medical delays can result in permanent disability or death.

Surveying the carnage, Dr. Adrian Boyle, president of the Royal College of Emergency Medicine, estimated that between 300 and 500 people are dying each week because of delays and related problems in the delivery of emergency medical care.

The COVID-19 pandemic has been a punishing stress test for Britain, as well as for the United States and other countries…. 

In fact, the COVID-19 pandemic simply deepened long-persisting problems underlying the British single-payer program. As the BBC reports, the current crisis in Britain’s single-payer system, though aggravated by a nasty flu season, has been building for “decades.”

Now, the American version, promoted by socialists and liberals looks like this:

The congressional single-payer bill (HR 1976) contains the key components driving the implosion of the British health care system, including government budgeting, bureaucratic central planning, and reduced pay for doctors and nurses.

Yet, last year, 120 House Democrats co-sponsored the legislation.

In sharp contrast to the congressional liberals’ top-down regime, which would restrict private coverage and care for Americans, British patients are still free to go outside of the British single-payer program and spend their own money on private health insurance coverage and care of their choice.

Of course, if you pay less you get less. You get disgruntled employees, people who feel exploited by the system, people who are happy to go out on strike.

The judgment crosses party lines. 

The Guardian, one of Britain’s top left-wing publications, says that the “crisis-ridden” NHS is “falling apart.” Keir Starmer, the leader of Britain’s opposition Labour Party, acknowledges the gravity of the NHS crisis, is criticizing the system’s “bureaucracy,” and is calling for the private sector to help “clear” Britain’s enormous waiting lists.

Privatization-- shades of the Iron Lady.

Friday, January 27, 2023

America's Self-Defeating China Policy

As you know, China is now public enemy No. 1. Serious legislators, afraid to be seen as soft or weak on China, utter flamboyant pronouncements of how tough we must be on the Middle Kingdom.

As it happens, and as happens with most macho posturing, such efforts often backfire. China is barely being hurt by our anti-China policies, and continues to sell into the world markets, with impunity.

So, former Treasury  Secretary Henry Paulson has just written a long and detailed  analysis of the state of play between the USA and China. He begins with his experience managing the 2008 market crisis.

At that time, self-interested cooperation was possible even amid political and ideological differences, clashing security interests, and divergent views about the global economy, including China’s currency valuation and its industrial subsidies. As Treasury secretary, I worked with Chinese leaders during the 2008 financial crisis to forestall contagion, mitigate the worst effects of the crisis, and restore macroeconomic stability.

This level of cooperation requires good relations. We no longer have good relations with China. 

 China and the United States jab accusatory fingers at each other, blame each other for bad policies, and trade barbs about a global economic downturn from which both countries and the world have yet to recover….

What has not changed, however, is the fact that without a stable relationship between the United States and China, where cooperation on shared interests is possible, the world will be a very dangerous and less prosperous place.

Without affixing blame or responsibility, Paulson describes the situation:

China and the United States are in a headlong descent from a competitive but sometimes cooperative relationship to one that is confrontational in nearly every respect. As a result, the United States faces the prospect of putting its companies at a disadvantage relative to its allies, limiting its ability to commercialize innovations. It could lose market share in third countries. For those who fear the United States is losing the competitive race with China, U.S. actions threaten to ensure that fear is realized.

And yet, our allies are continuing to do business with China. They are simply picking up the slack:

Although many countries share Washington’s antipathy to China’s policies, practices, and conduct, no country is emulating Washington’s playbook for addressing these concerns. It is true that nearly every major U.S. partner is tightening up its export controls on sensitive technologies, scrutinizing and often blocking Chinese investments, and calling out Beijing’s coercive economic policies and military pressure. But even Washington’s closest strategic partners are not prepared to confront, attempt to contain, or economically deintegrate China as broadly as the United States is.

Instead of decoupling or deintegrating economically, many countries are instead deepening trade with China even as they hedge against potential Chinese pressure by diversifying business operations, building new supply chains in third countries, and reducing exposure in the most sensitive areas. Perhaps that is why, in 2020, despite years of American warnings, China overtook the United States as the European Union’s largest trading partner. Both EU exports to and imports from China grew in 2022. And Asian and European leaders, spurred by the November 2022 visit to Beijing by German Chancellor Olaf Scholz, now look set to beat a path to Chinese President Xi Jinping’s door, with trips by Philippine President Ferdinand Marcos, Jr., French President Emmanuel Macron, and Italian Prime Minister Giorgia Meloni likely to drive a broader trend.

We have our policies. The rest of the world is not going along:

China is now the world’s largest trading nation. Nearly two-thirds of all countries trade more with China than the United States.

Animosity against the world’s largest trading nation might make us feel good, but it is economically counterproductive:

Americans benefit from access to the world, and China will remain a huge market that Americans can either partake in or abandon to competitors. China is the world’s second-largest economy, its largest manufacturer, and its largest trader. It will be a big part of the global financial picture for decades to come. Instead of fatalistically accepting the descent of an economic iron curtain, Washington should negotiate aggressively with China to win opportunities for Americans in its market. Administration officials should have serious discussions with Chinese leadership about how to manage the decoupling in a way that allows for mutually beneficial trade. Right now, the two countries are mostly trading charges and countercharges while doing nothing to expand mutually beneficial economic opportunities.

Thursday, January 26, 2023

Fire the Massage Therapists

 I trust you know that the giants of big tech are laying people off. Seems they hired too much and now have to pare the staffing.

This also includes depriving their spoiled staff of certain perks-- like massage therapists:

Alphabet-owned Google announced last week it was giving the heave-ho to 12,000 employees — the latest tech company to cut back amid a slowing economy.

The layoffs include more than 1,800 jobs in the company’s home state of California.

About 177 positions were in Los Angeles, mostly at Google’s Playa Vista campus. About 60 jobs were lost in Irvine.

And according to regulatory filings, among the gigs being eliminated are 27 in-house massage therapists — 24 in the Bay Area and three in SoCal.

The freebie era is over. Indulgence is no longer the order of the day. Burning money on useful extravagances has ended. Evidently, it’s a good sign.

Wednesday, January 25, 2023

Caveat Emptor

In the world of stock market prognostications, few strategists are as good as Jeremy Grantham. 

As a public service, I bring you his outlook for the markets. To say that it is cautionary would be an exaggeration. Thus, from the New York Post:

The stock market is set to go “back to the meat grinder” this year despite a recent minor rally, with the broad-based S&P 500 potentially plummeting by 50% in a worst-case scenario, famed investor Jeremy Grantham warned Tuesday.

Grantham, the 84-year-old co-founder of Boston-based asset management firm GMO, told clients in a letter that the “first and easiest leg of the bursting of the bubble” in US stocks is now “complete,” with “the most extreme froth” wiped out during last year’s selloff.

Under his projections, the S&P 500 would plunge by about 17% to approximately 3,200 for the full year of 2023, or about 20% after early gains in the market so far this year. But the outcome could be far worse if the global economy topples into a significant recession, according to Grantham.

“Regrettably there are more downside potentials than upside,” Grantham wrote. “In the worst case, if something does break and the world falls into a severe recession, the market could fall a stomach-turning 50% from here. At best there is likely to be at least a further modest decline, which by no means balances the risks.”

In brief, caveat emptor.

Of course, you might believe that real estate is a better investment. To which Goldman Sachs suggests that the hottest real estate markets-- San Jose, Phoenix, Austin and San Diego-- are about to collapse.

The Daily Mail has the story:

House prices will plummet this year with San Jose, Austin, Phoenix, and San Diego staring down the barrel of 25% boom-to-bust declines, according to Goldman Sachs.

The Fed's ongoing inflation battle, which sent mortgage rates soaring from 3% to 7% in 2022, has throttled the housing market and sparked the biggest price correction since the 2008 crash.

Goldman warned investors in a research paper earlier this month titled, 'Getting worse before getting better', that housing markets were particularly overheated in the Southwest and Pacific Coast.

While Goldman's outlook for the national housing market is less dire, with prices seen dropping 6% this year before rising next year, certain cities could see sharp declines in home valuations. 

San Jose, Austin, Phoenix, and San Diego are projected to be stung with peak-to-trough declines of 25% that would rival the 2007-08 Global Financial Crisis which saw house prices plunge 27% nationwide. 

Tuesday, January 24, 2023

Wherefore Ukraine?

It is an unassailable truth-- once you reach the peak you have nowhere to go but down. Such is the principle behind what is called contrarian investment sentiment--namely, sell what everyone wants and buy what no one wants-- but it even applies to international affairs.

Several weeks ago we reported the triumph of Volodymyr Zelensky, lion of Western democracies, beloved and adored by the American Congress, the new Winston Churchill, the leader who was defeating the Russian bear and advancing the Western democratic cause.

As the other old saying goes-- if it sounds too good to be true, it probably isn’t.

This morning resident contrarian David Goldman offered some perspective on Twitter:

Ukraine might have 23mn residents left vs. prewar paper total of 43mn, $1 tr of damage on a $120 bn GDP, and a failing military position. The Ghost of Richelieu told me a year ago that Putin would erase Ukraine as a country.

This morning in the Wall Street Journal, Walter Russell Mead warns against European triumphalism:

With many European leaders sheltering under the American security umbrella even as they double down on close economic relations with China, it isn’t clear how long the U.S. will be willing or able to protect the EU from the consequences of its geopolitical incapacity.

He adds:

Mr. Putin hasn’t yet lost his war. Fears that Russian mobilization could bring hundreds of thousands of fresh if poorly trained troops into the conflict, along with a sober assessment of the effectiveness of the Russian air campaign, are leading some in Kyiv and elsewhere to warn of a massive Russian offensive in the spring.

If Germany relents and sends tanks to Ukraine, Russian hopes for a successful offensive will take a hit. Yet even then, without American money, equipment and ammunition, Ukraine can’t continue the unequal struggle indefinitely.

What seemed to be a great victory now seems to be a lost cause.

And Stephen Bryen, in the Asia Times, suggests that the desperate call for more tanks means that Ukraine is losing the war.

President Volodymyr Zelensky knows full well he has arrested most of his political opponents and silenced the media he dislikes, including some instances where his opponents have allegedly been liquidated by Ukraine’s secret police, the SBU. 

But that won’t protect him or his colleagues if people in Kiev start to understand that Ukrainian defenses are folding.

Despite claims to be a democracy, Ukraine is actually an authoritarian country that has blocked out real news and throttled any opposition. But because of social media, the messages will get through anyway and Zelensky and his team have a lot to fear.

One suspects that we will be hearing less and less from Ukraine.

Monday, January 23, 2023

Is Math Racist?

Nothing is quite so objective as mathematics. It has right and wrong answers and offers everyone a level playing field. When it comes to merit and to fair competition, math should be high on everyone’s list.

And yet, some people in some groups consistently do better at math. Some consistently do worse. If the latter group comprises people of color, we are now obliged to believe that math is racist. The reason is quite simple-- we do not want to declare that certain people from certain groups have failed. That would mean that they should take responsibility for their failures and perhaps even work harder on math.

If we are looking for a reason why certain groups do not do as well, we would be obliged to suggest that they are not held to be responsible for their failings. They did not fail at math; math failed them.

Naturally, you thus consign these groups to secondary places in the economy. But, more importantly, you tell them that they are not responsible for their own behavior. And this leads them to demand rewards that they did not earn-- because they were cheated.

Jonathan Turley reports on the way this thinking is infesting the academy. (via Maggie's Farm) The professor in question, I would surmise, teaches in an education school, thus, is preparing teachers to go out and to teach in pre-college schools.

His thesis-- math is bad; meritocracy is bad. Since the people who excel at them are invariably Asian, it is all a function of white racism:

We recently discussed a professor who declared that astrophysics is racist due to its focus on “individualism” and exceptionalism.” These critiques are part of a larger movement alleging that everything from math to meritocracy is racist. The latest controversy centers around a lecture by Luis Leyva, associate professor of mathematics education at Vanderbilt University entitled “Undergraduate Mathematics Education as a White, Cisheteropatriarchal Space and Opportunities for Structural Disruption to Advance Queer of Color Justice.” In other words, math is a racist field of study advancing white male, straight “conforming-to-assigned sex” individuals.

Of course, this quickly descends into a theoretical mish mosh:

Leyva advocates the “re-imagining undergraduate mathematics education with structural disruptions that advance justice for learners marginalized across intersections of race, gender, and sexuality.”

The professor might not know anything about math, but he knows how to trot out the latest in ideologically driven hatred of white people.

In so doing, he is marginalizing groups of people, by telling them that they need not learn math. So much for a level playing field:

It is the repeated calls to “decolonize” math that are most concerning. Math has always been one of the greatest equalizers, no pun intended.  As I discussed earlier, it is a shame to see math treated as a field of privilege when many of us view it as a field of pure intellectual pursuit and bias neutrality.  Either the math is there or it is not.  The race of the mathematician will not change the outcome.

Sunday, January 22, 2023

California Failing

From time to time we check in with Joel Kotkin, our go-to source for all things California. At a time when California’s governor Gavin Newsom signals that he is considering a presidential run, it becomes even more urgent to evaluate his track record. That means, to evaluate the success or failure of his progressive California policies.

As has happened in the past, Kotkin reports that California, with its green policies and socialism has basically been self-destructing:

California’s difficulties undermine the notion, so fashionable today, that with the right mixture of technology and utopian dreaming, societies can forge a future that is both green and widely prosperous. In reality, California now has America’s worst rates of cost-of-living-adjusted poverty and functional illiteracy, the worst housing affordability in the continental US and a devastating shortage of mid-skilled jobs. What’s more, in 2022, California suffered some of the lowest personal-income growth rates in the country, and its GDP grew at less than half the pace of its arch-rival, Texas.

How did this happen?

California’s struggles demonstrate what happens when an economy shuns both industry and solid middle-class jobs. Instead, it has placed heavy bets on ephemera, like social media and entertainment. The failure of this approach now stands exposed. Today, California’s once-huge budget surplus has morphed into a deficit of $25 billion, one that may become even higher in the coming years, given the high chance of recession

The state tries to make up its fiscal shortfall by raising taxes, but since it has been driving business away, there’s no one left to tax. 

Because of this, California’s political class is under pressure either to shrink its expansive welfare state and regulatory regime, or to raise taxes – although taxes are already among the highest in the country. Meanwhile, companies are deserting California in droves, as are some of its top one per cent of earners, who pay roughly half of the state’s income taxes.

As for diversity, equity and inclusion, California has led the nation… and has shown how destructive these policies are in practice:

California has the fourth-highest GINI inequality index out of American states, and has experienced a sizeable expansion of inequality since 2010, according to American Community Survey data. Despite California’s fanatical commitment to ‘anti-racist’ affirmative action and racial preferences, African-Americans and Latinos perform poorly in terms of income and homeownership in Los Angeles and the Bay Area, with the latter among the most segregated places in the US. The gap between California’s fantastically rich elite and the struggling masses illustrates the emptiness of the elites’ supposedly ‘progressive’ values.

And, green policies have also helped destroy the state economy:

California’s embrace of green ideology has been particularly destructive to the economy. Technology companies have been key backers of California’s unproven and costly climate-centred policies, which are the most expensive in the US. While such policies are less directly damaging to digital companies, they have proven devastating to California’s other industries, notably to manufacturing, logistics and agriculture. California, the ultimate advanced industrial power in the late 20th century, has haemorrhaged industrial jobs in the 21st. Its severe underperformance compared with rivals extends to construction, professional and business services, and increasingly even tech.

Kotin leaves us on a slightly optimistic note:

In its current form, California is less a role model than a cautionary tale. But all is not lost. California still enjoys leads in a series of key industries, ranging from nuclear fusion, medicine, space and semiconductor design to mass entertainment and high-tech agriculture. Much of its population retains a large innovative streak, and could still adapt to changing economic conditions. Any revival, however, will need more than just some minor adjustments by Newsom and the legislature – it will take sustained pressure from Californian voters demanding something very different.