Monthly Archive for May, 2007

The Minimum Wage Sucks

Current teenage unemployment rates for April 2007:
All teenagers: 13.3%
Black teenagers: 30.6%
Male black teenagers: 34%
Female black teenagers: 27.4%

More here and here.

Quote Of The Day

In California, which outlawed preferences in 1996, more black and Hispanic students are enrolled in college today than ever before — and more importantly, a higher percentage of them are graduating. In 1995, only 26 percent of black and Hispanic students actually graduated from the UC system; now 51 percent graduate, roughly equal to the white and Asian rate…. It’s about time we ended racial double standards once and for all. In doing so, we will actually improve the chances that more black and Hispanic students will earn college degrees”. —Linda Chavez, chairman of the Center for Equal Opportunity

Housing Projects And Their Significance To Our Education System

The Los Angeles Times had a long article on the Ramona Gardens housing projects in East Los Angeles. The article writes:

…Ramona Gardens, an Eastside housing project that has seen countless confrontations between the police and its home-grown street gang, Big Hazard. The cycles of seething standoffs and bursts of violence stretch back generations and have defeated every effort to bring lasting security to the neighborhood…

The police also say they are often targeted by Big Hazard. The gang has at least 260 members, including those in prison or living outside Ramona Gardens, and has connections to the Mexican Mafia, according to the LAPD.

Twice since January 2006, the police say, gunmen have fired at patrol cars in Ramona Gardens, with bullets narrowly missing officers.

“Every time we walk away from our car, it’s going to be vandalized,” said LAPD Capt. William Fierro. “I just don’t know how to get the roots of that gang out of there.”

None of this surprises housing experts. They say that Ramona Gardens, squeezed by railroad tracks and the San Bernardino Freeway, has become a field laboratory for housing policies gone wrong and that any solution would require razing the buildings and starting from scratch. The city’s oldest project, Ramona Gardens opened in 1941.

“It has outlived its useful life,” said Rudy Montiel, executive director of the Los Angeles Housing Authority, which runs the project. Rents for the 497 residences are based on income and can be as little as $50 a month.

Montiel said Ramona Gardens typifies a failed model, because it piles poor families on top of each other and is separated from the surrounding community — hothouse conditions for predatory crime. He said the old Aliso Village project nearby was in similar distress until it was replaced with a combination of low- and middle-income housing. That could ultimately be Ramona Gardens’ fate, he said, although there is no specific plan for such an undertaking.

“This is an area that has been neglected for years,” said City Councilman Jose Huizar, whose district includes Ramona Gardens. He pledged to begin meeting regularly with residents.

A litany of ills

The project has witnessed shootings, a thriving drug trade, shakedown schemes that victimized delivery and bus drivers, apartment squatting by gang members and street skirmishes that rained rocks and bottles on police, according to the LAPD.

The Ramona Gardens projects are not unique – all projects in the Los Angeles area are controlled by some notorious gang. You have the PJ’s and the Grape Streets controlling the projects in Watts, the Harbor City crips and ese’s controlling the projects in Harbor City, West Side Wilmas controlling the projects in Wilmington, and you have the Culver cities controlling the projects in Culver city. Time and time again, subsidizing low income housing translates to subsidizing gangs, crime, and drug use.

On the other hand, when the projects have been removed and replaced with market valued housing units it has been an incredible success. Take Harbor City as one example – my cousin grew up a couple of blocks away from the Harbor City projects and distinctively remembers how violent the community was. The area was so plagued with violence that many residents would avoid the main street so as not to pass near the projects. The Harbor City gangs that controlled the projects, Harbor City 13 and the Harbor City crips, were notorious in the Harbor Area, known as one of the, if not the, most violent gangs in all of the Harbor Area. However, since the projects have been torn down and replaced with at market housing all of that has changed. While the two gangs still exist, they are nowhere near the force they once were. Robbed of their hang out, their breeding ground for new members, and their shelter from the outside world, they have been reduced to a skeleton of what they once were. Tearing down the projects was good for the community and the people who may have ended up living in the projects.

There are two different approaches to subsidizing housing for the poor: providing ‘low-income’ housing which is what projects are, and then there are direct housing vouchers, where you give poor families a check that can be used as rent money at a housing location of the families choosing. Vouchers disperse the poor and in doing so make it difficult for gangs to control a certain area. Clearly, as the failure of projects throughout the LA area have shown, the latter method is much more efficient.

Yet our public school system relies more on the housing method than on the voucher method. By forcing members of a particular area to attend the school system in the community you create an environment where neighborhood gangs can take more control of the community members, thereby increasing the gang culture and the gangs hold on students in the area. This results in an increase in the number of students joining the gang and in the gangs power.

By separating the school from the community members you make it harder for gangs to control a certain area, you make it easier for students and attentive parents to escape the gang culture, and in the end you make for better communities and students. This has been the experience of projects around California, and I believe similar results would come if school vouchers were implemented.

Why Is Income Inequality in America So Pronounced? Consider Education

Economist Tyler Cowen, writting in the New York Times, gives the most prominent reason for rising inequality:

Economic Scene

Why Is Income Inequality in America So Pronounced? Consider Education

Published: May 17, 2007

The most commonly cited culprits for the income inequality in America — outsourcing, immigration and the gains of the super-rich — are diversions from the main issue. Instead, the problem is largely one of (a lack of) education.

The extent of outsourcing, for instance, is not yet high enough to have much effect on American wages. Even if a call center is set up in India, this helps American business expand at home. Most generally, the net flow of investment is into the United States, not away from it. It appears that more American jobs are “in-sourced” than outsourced.

Nor should we be distracted by the gains of the top 1 percent. The goal should be to elevate the poor, not knock down the tall poppies. Microsoft has created cheap software and many jobs, and its co-founder, Bill Gates, is giving away most of his fortune.

For the economy as a whole, labor’s share of national income has stayed roughly constant at just above 70 percent. What has changed is that highly skilled laborers earn more labor income than low-skilled workers.

Many of the very wealthy have built their fortunes by taking companies private, buying the right securities at the right time or running successful hedge funds. Arguably, these activities improve the allocation of capital and thus enhance productivity.

But even if these individuals perform no socially useful function, their gains reallocate wealth from one class of investors to another. That is, one group of investors reaps profits by buying in first and bidding up equity prices, thereby causing later investors to pay more for the same companies. This process transfers value from the relatively wealthy to the extremely wealthy, but it doesn’t much hold back the poor.

Nor are recent changes in equality about the tax system. Whatever one thinks of President Bush’s reductions in marginal tax rates, pretax incomes also show greater inequality.

Immigration has a smaller influence on wages than is often believed as well. Claudia Goldin and Lawrence F. Katz, both professors of economics at Harvard, estimate the numbers in their recent paper, “The Race Between Education and Technology: The Evolution of U.S. Educational Wage Differentials, 1890 to 2005,” soon to be expanded into a book.

College graduates have been gaining relative to high school graduates. But competition from immigrant labor accounts for only 10 percent of the change in the wages of unskilled workers, relative to the skilled, since 1950.

Starting about 1950, the relative returns for schooling rose, and they skyrocketed after 1980. The reason is supply and demand. For the first time in American history, the current generation is not significantly more educated than its parents. Those in need of skilled labor are bidding for a relatively stagnant supply and so must pay more.

The return for a college education, in percentage terms, is now about what it was in America’s Gilded Age in the late 19th century; this drives the current scramble to get into top colleges and universities. In contrast, from 1915 to 1950, the relative return for education fell, mostly because more new college graduates competed for a relatively few top jobs, and that kept top wages from rising too high.

Professors Goldin and Katz portray a kind of race. Improvements in technology have raised the gains for those with enough skills to handle complex jobs. The resulting inequalities are bid back down only as more people receive more education and move up the wage ladder.

Income distribution thus depends on the balance between technological progress and access to college and postgraduate study. The problem isn’t so much capitalism as it is that American lower education does not prepare enough people to receive gains from American higher education.

Bottlenecks currently keep more individuals from improving their education. Professor Katz has suggested changes at multiple levels, including additional college aid, more-accessible community colleges, easier financial aid forms, more serious attempts to identify and retain top teachers in high schools and school voucher experiments.

It doesn’t suffice simply to increase the number of people in college; rather the new students must be prepared to learn. There is, however, no single magic bullet.

Pessimists like Charles Murray, co-author of the much-debated 1994 book “The Bell Curve,” have argued that only so many individuals are educable at a high level. If that were the case, current levels of inequality might be here to stay.

But the evidence suggests that when additional higher education becomes available, it offers returns in the range of 10 to 14 percent per year of college, at least for the first newcomers to enroll.

Nonetheless it will, sooner or later, become increasingly difficult to deliver the gains from college — not to mention postgraduate study — to the entire population. Technology is advancing faster than our ability to educate. So even if inequality declines today, it may well intensify in the future. Even if American education improves at every level, the largely not-for-profit educational sector may simply be less dynamic than the progress of new technologies.

The lesson is this: Economists are homing in on the key to the inequality problem, but don’t think any solution will necessarily last for long.

Tyler Cowen is a professor of economics at George Mason University and co-author of a blog at www.marginalrevolution.com.
The full article can be found here.

Was Osama Right?

Bernard Lewis, Professor of Near Eastern Studies at Princeton University, writes:

Was Osama Right?
Islamists always believed the U.S. was weak. Recent political trends won’t change their view.

BY BERNARD LEWIS
Wednesday, May 16, 2007 12:01 a.m. EDT

During the Cold War, two things came to be known and generally recognized in the Middle East concerning the two rival superpowers. If you did anything to annoy the Russians, punishment would be swift and dire. If you said or did anything against the Americans, not only would there be no punishment; there might even be some possibility of reward, as the usual anxious procession of diplomats and politicians, journalists and scholars and miscellaneous others came with their usual pleading inquiries: “What have we done to offend you? What can we do to put it right?”

A few examples may suffice. During the troubles in Lebanon in the 1970s and ’80s, there were many attacks on American installations and individuals–notably the attack on the Marine barracks in Beirut in 1983, followed by a prompt withdrawal, and a whole series of kidnappings of Americans, both official and private, as well as of Europeans. There was only one attack on Soviet citizens, when one diplomat was killed and several others kidnapped. The Soviet response through their local agents was swift, and directed against the family of the leader of the kidnappers. The kidnapped Russians were promptly released, and after that there were no attacks on Soviet citizens or installations throughout the period of the Lebanese troubles.

These different responses evoked different treatment. While American policies, institutions and individuals were subject to unremitting criticism and sometimes deadly attack, the Soviets were immune. Their retention of the vast, largely Muslim colonial empire accumulated by the czars in Asia passed unnoticed, as did their propaganda and sometimes action against Muslim beliefs and institutions.

Most remarkable of all was the response of the Arab and other Muslim countries to the Soviet invasion of Afghanistan in December 1979. Washington’s handling of the Tehran hostage crisis assured the Soviets that they had nothing to fear from the U.S. They already knew that they need not worry about the Arab and other Muslim governments. The Soviets already ruled–or misruled–half a dozen Muslim countries in Asia, without arousing any opposition or criticism. Initially, their decision and action to invade and conquer Afghanistan and install a puppet regime in Kabul went almost unresisted. After weeks of debate, the U.N. General Assembly finally was persuaded to pass a resolution “strongly deploring the recent armed intervention in Afghanistan.” The words “condemn” and “aggression” were not used, and the source of the “intervention” was not named. Even this anodyne resolution was too much for some of the Arab states. South Yemen voted no; Algeria and Syria abstained; Libya was absent; the nonvoting PLO observer to the Assembly even made a speech defending the Soviets.

One might have expected that the recently established Organization of the Islamic Conference would take a tougher line. It did not. After a month of negotiation and manipulation, the organization finally held a meeting in Pakistan to discuss the Afghan question. Two of the Arab states, South Yemen and Syria, boycotted the meeting. The representative of the PLO, a full member of this organization, was present, but abstained from voting on a resolution critical of the Soviet action; the Libyan delegate went further, and used this occasion to denounce the U.S.

The Muslim willingness to submit to Soviet authority, though widespread, was not unanimous. The Afghan people, who had successfully defied the British Empire in its prime, found a way to resist the Soviet invaders. An organization known as the Taliban (literally, “the students”) began to organize resistance and even guerilla warfare against the Soviet occupiers and their puppets. For this, they were able to attract some support from the Muslim world–some grants of money, and growing numbers of volunteers to fight in the Holy War against the infidel conqueror. Notable among these was a group led by a Saudi of Yemeni origin called Osama bin Laden.

To accomplish their purpose, they did not disdain to turn to the U.S. for help, which they got. In the Muslim perception there has been, since the time of the Prophet, an ongoing struggle between the two world religions, Christendom and Islam, for the privilege and opportunity to bring salvation to the rest of humankind, removing whatever obstacles there might be in their path. For a long time, the main enemy was seen, with some plausibility, as being the West, and some Muslims were, naturally enough, willing to accept what help they could get against that enemy. This explains the widespread support in the Arab countries and in some other places first for the Third Reich and, after its collapse, for the Soviet Union. These were the main enemies of the West, and therefore natural allies.

Now the situation had changed. The more immediate, more dangerous enemy was the Soviet Union, already ruling a number of Muslim countries, and daily increasing its influence and presence in others. It was therefore natural to seek and accept American help. As Osama bin Laden explained, in this final phase of the millennial struggle, the world of the unbelievers was divided between two superpowers. The first task was to deal with the more deadly and more dangerous of the two, the Soviet Union. After that, dealing with the pampered and degenerate Americans would be easy.

We in the Western world see the defeat and collapse of the Soviet Union as a Western, more specifically an American, victory in the Cold War. For Osama bin Laden and his followers, it was a Muslim victory in a jihad, and, given the circumstances, this perception does not lack plausibility.

From the writings and the speeches of Osama bin Laden and his colleagues, it is clear that they expected this second task, dealing with America, would be comparatively simple and easy. This perception was certainly encouraged and so it seemed, confirmed by the American response to a whole series of attacks–on the World Trade Center in New York and on U.S. troops in Mogadishu in 1993, on the U.S. military office in Riyadh in 1995, on the American embassies in Kenya and Tanzania in 1998, on the USS Cole in Yemen in 2000–all of which evoked only angry words, sometimes accompanied by the dispatch of expensive missiles to remote and uninhabited places.

Stage One of the jihad was to drive the infidels from the lands of Islam; Stage Two–to bring the war into the enemy camp, and the attacks of 9/11 were clearly intended to be the opening salvo of this stage. The response to 9/11, so completely out of accord with previous American practice, came as a shock, and it is noteworthy that there has been no successful attack on American soil since then. The U.S. actions in Afghanistan and in Iraq indicated that there had been a major change in the U.S., and that some revision of their assessment, and of the policies based on that assessment, was necessary.

More recent developments, and notably the public discourse inside the U.S., are persuading increasing numbers of Islamist radicals that their first assessment was correct after all, and that they need only to press a little harder to achieve final victory. It is not yet clear whether they are right or wrong in this view. If they are right, the consequences–both for Islam and for America–will be deep, wide and lasting.

Mr. Lewis, professor emeritus at Princeton, is the author, most recently, of “From Babel to Dragomans: Interpreting the Middle East” (Oxford University Press, 2004).

The full article can be found here.

Locke High seeks to leave L.A. Unified

The Los Angeles Times gives another example of the constant struggle between students and good teachers vs. the unresponsive teachers union.

Locke High seeks to leave L.A. Unified

Its teachers have signed petitions urging control be given to Green Dot charter schools. The loss would be a blow to the district and union.

Challenging the balance of power in the city’s public school system, a leading charter school organization is poised to wrest control of a failing high school from the elected Los Angeles Board of Education.

Green Dot Public Schools, which has clashed frequently with the board in its aggressive push to expand, has quietly overseen the collection of signatures of support from a majority of the tenured teachers at Locke High School — clearing the major legal hurdle toward converting the campus into a series of charter schools.

Underscoring the anxiety and anger the plan is unleashing within the district, Locke Principal Frank Wells was escorted off campus and relieved of his duties late Tuesday afternoon pending the outcome of a district investigation into allegations that Wells allowed teachers to leave their classrooms to collect and sign petitions.

Wells called the charges “a total fabrication,” saying no classes were disrupted as teachers signed and collected signatures during non-class time. Teachers who helped collect signatures supported Wells’ version of events.

Under Green Dot’s proposal, which because of state law the Los Angeles school board would appear to have little choice but to approve, the 2,800-student Watts campus would be divided into 10 small Green Dot schools beginning in fall 2008.

“It’s a leap of faith, but if you believe in this partnership between Green Dot and Locke teachers, then you believe that we are trying to change education in Los Angeles by turning more attention to students’ needs and empowering teachers,” said Bruce Smith, an English teacher at the school.

Amid dozens of poor-performing middle and high schools in the Los Angeles Unified School District, Locke has long languished as one of the worst. At least one of every two students drops out, while the majority who remain score at or near the bottom on standardized tests.

More than half of the school’s 73 tenured teachers signed petitions this week expressing interest in converting Locke into Green Dot charters. Once verified, the petitions — copies of which were obtained by The Times and checked against a roster of the Locke faculty — would legally allow Green Dot to petition the board for control of the school. Many un-tenured teachers also signed the petitions.

With school district and union leaders quickly catching wind of the hostile-takeover plan and scrambling to counter it with a reform plan of their own, Green Dot founder Steve Barr returned early from a conference in New Orleans to hold a news conference this morning with Locke teachers and parents outside the school.

Charter schools are publicly funded but run independently, outside many of the regulations and restrictions of school districts. In exchange for the freedom to innovate in the classroom, charters are expected to improve student performance and serve as incubators for school reform. Most charters in California are start-ups that typically must rent or buy classroom space, but state law also allows for the less common conversion process.

Unlike the handful of other schools that converted to charters in L.A. Unified, Green Dot’s gambit, if successful, would mark the first time an outside charter group organized a break from the district.

And Green Dot is proposing a clean break.

The group’s charter petition — a copy of which was provided to The Times and which must be voted on by the seven-member school board — calls for Green Dot to receive its funding directly from the state, instead of allowing it to first pass through district coffers. Teachers who wish to remain at the deeply troubled school would have to re-apply for their jobs to principals hired by Green Dot. The extensive labor agreement negotiated by the district’s teachers union would also be thrown out, as Locke teachers would work under the shorter, simpler pact signed by Green Dot’s union.

Indeed, the plan promises to escalate the long-running power struggle that has pitted the fast growing Green Dot against the school board and the union, United Teachers Los Angeles — both of which have much to lose.

In addition to losing about $19 million in state funds that the district receives each year for Locke students, the school’s conversion could serve as a serious setback to the school board as it scrambles to prove that it can put forth innovative reforms and drive improvements itself at dozens of low-performing schools.

Board members are particularly sensitive to criticism in light of Mayor Antonio Villaraigosa’s ongoing efforts to gain some control of the district, during which he has publicly pounded board members — and the bureaucracy they oversee — with the criticism that they are resistant to change.

A Locke takeover would also complicate matters for Supt. David L. Brewer, who is still trying to assert his authority over the nation’s second-largest district since being hired late last year. Until last month, Brewer and board President Marlene Canter were trying to strike a deal with Barr over Locke, but talks broke down over Barr’s rejection of Brewer’s demand that teachers be district employees, subject to the UTLA contract.

“Why would we dilute something that is working?” Barr said in an interview, referring to the promising early results his other schools have posted. “Every conversation I had with the superintendent, it was, ‘Have you talked to the union?’ Who runs this district: the superintendent or the union?”

Brewer expressed frustration that Barr had “moved unilaterally without finishing that discussion.” He and Canter expressed hope that in coming months the district would launch an “innovation division” to help groups like Green Dot implement their reform plans in district schools, while keeping them part of the district.

For their part, union officials stand to lose more than just the dues-paying members who bolt to Green Dot. Union leaders have been some of the harshest critics of the charter movement in Los Angeles, and of Green Dot in particular. The support for Green Dot by rank-and-file Locke teachers could undermine the authority of union leaders and their position as major power brokers in the district — especially if teachers at other schools follow suit.

“I’m going to urge teachers around the city to rise up and take control of their schools,” said English teacher Smith, who plans to speak at today’s news conference. “You can cross out Locke and put in Roosevelt High, or Dorsey or Crenshaw.”

The decision to remove Wells came days after he visited a Green Dot campus and publicly lashed out at the district, saying it would take “revolutionary” change to improve his school.

Brewer and top officials said Wells’ contract as principal will not be renewed next year because of “leadership problems” during his three years on campus. The allegations surrounding the signatures forced them to remove him immediately, they said.

A.J. Duffy, president of the union, angrily denounced Green Dot’s collection of signatures, saying teachers should have been given a chance to first hear other reform ideas from the union and other groups. He said the union is trying to pull together a counter plan to present to Locke teachers in coming weeks.

“When a staff gets all the information to make a decision … we would support whatever they want, even if we disagree with it,” he said. “I understand the teachers’ frustrations. The district is not receptive to change and as hard as we have pushed we have not been able to convince them that change is needed. But, I guess they’ve got the message now.”

The full article can be found here.

Capitalism Vs. Others – A Discussion

This post is a continuation of the discussion between me and tin that started here and continued here.

Let me start the discussion with some definitions. I define communism, or more generally collectivism, as any economic system that exhibits the following criteria,

1. Little to no property rights

2. little to no free trade

3. the means of production and the price of goods are controlled by government

I define capitalism as the following,

1. strong property rights

2. high levels of free trade

3. an overall laissez-faire economy where people are allowed to enter into whatever contractual agreements they like

4. An economic system where prices are allowed to signal scarcity – the more expensive something is, the more scarce and in demand it is

5. A government that protects property rights, enforces contracts, and holds up the rule of law

Why is capitalism superior to other forms of economic ideologies? One of the primary reasons is that because it has been implemented and seen to work – especially in comparison to other economic systems.

Walter Williams, professor of economics at George Mason University, explains the differences this way:

There’s no complete explanation for why some countries are affluent while others are poor, but there are some leads. Rank countries along a continuum according to whether they are closer to being free-market economies or whether they’re closer to socialist or planned economies. Then, rank countries by per-capita income. We will find a general, not perfect, pattern whereby those countries having a larger free-market sector produce a higher standard of living for their citizens than those at the socialist end of the continuum.

What is more important is that if we ranked countries according to how Freedom House or Amnesty International rates their human-rights guarantees, we’d see that citizens of countries with market economies are not only richer, but they tend to enjoy a greater measure of human-rights protections. While there is no complete explanation for the correlation between free markets, higher wealth and human-rights protections, you can bet the rent money that the correlation is not simply coincidental.

So we see here that the more capitalist a country becomes, especially compared to collectivist economies, the higher the standard of living and human rights are.

This is not just a pattern in the West, this pattern has been repeated all over the world. To see how the spread of capitalism around the world is affecting global poverty I recommend everybody watch this short ted talk by Hans Rosling, a Swedish professor on international health and economic development.

Click here to watch the ted talk

That is not to say that we don’t have more to learn on economics or that capitalism is perfect – we certainly do and it definitely isn’t, but any reasonable discussion on economics must first start off acknowledging what we know works and must work within that system. History has shown as clearly as it possibly can that a market oriented economy is superior, indeed vastly superior as far as standard of living for the poor and human rights go, to a government centered economy where prices are dictated by government fiat instead of by scarcity. Utopian aspirations may be good for establishing an end goal but actual economic implementation should be dictated by theory and empirical evidence, especially when so many lives depend on it.