Archive for the 'Personal' Category

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Lil Hispanic Pundit

Me and my now five month old baby boy:

Lil Hispanic Pundit

Picture was taken in front of the Birch Aquarium in La Jolla, California.

More pictures here.

The Invisible Hand vs Charity

One of the major problems I have with Chicano Studies is its overemphasis on altruistic ventures as opposed to “personal gain”. Becoming a community organizer, for example, is more encouraged than becoming an engineer. This was particularly important to me last year when my sister, being in her junior year of high school, was applying to colleges. Though she had already decided on engineering as her intended major, she was having doubts and was considering a profession that “makes a difference”.

I explained to her that engineering can also be used to make a difference, the two are not mutually exclusive. I also said that when you compare engineering to the highly inefficient means of “making a difference” common among chicano studies students, like community organization, one can make a very strong argument that engineering makes more of a difference – and in the process, you can make a good living doing it.  She didn’t seem convinced and I could tell that I needed to explain my point better. Unable to do so at the time I resorted to reminding her that there is a field in engineering that may allow her to design better prosthesis, and being that my dad lost his leg from the knee down in a work accident, she could possibly make his life and people like him better.

That satisfied her but I still thought I needed a better way to explain my point. The blog post I did later on the topic, titled “In Praise Of Personal Interest” did a better job, I wrote:

…if charity is your goal, with extra money [you would make by being an engineer] you can provide valuable resources, fund efficient charities, be a stronger role model to the next generation (three people in my family want to be engineers now, just because of my experience), provide a better future for your children, assist your family out, or, just as importantly, be a testament to those around you that hard work and dedication pay off, that there is a way out of the ghetto.

Lastly, unlike nonprofits, even if altruism is not your goal, capitalism works in such a way that when pursuing personal interest “you are led, as if by an invisible hand, to do things that improve the lives of others”.

Still though, I felt like I could have explained myself better. My point does not come across as clearly as I’d like it to. Well to my surprise, while riding my bicycle to work yesterday, I was listening to a bloggingheads podcast with Philosopher Peter Singer and economist Tyler Cowen about alleviating poverty when Cowen asks Peter Singer a question that I would have asked him if I was doing the podcast, namely: what advice would you give to an 18 year old in college who has read Peter Singers book, is convinced that making a difference matters, and is considering a career as an engineer in the cell phone industry because she sees what a difference cell phones are making to the poor in Africa? Would that career choice, from an altruistic perspective, make more of a difference than, say, a person who makes 40k/year and gives 15% to the poor in India? What if the engineer never gives a dime to charity?

What answer do you think Peter Singer gave? Click below to see the exchange (full video, which is highly recommended, can be found here). It is a good answer, and in the end, it moves me a step closer to finally explaining my point better.  Maybe I should forward this to my sister?

Obama’s Economic Bubble

Newsweek makes much of the fact that President Obama invited two vocal critics of his administration over to dinner, Paul Krugman and Joe Stiglitz. Newsweek writes:

Mindful of his predecessor, Barack Obama seems to be trying harder to make sure he hears all sides. On the night of April 27, for instance, the president invited to the White House some of his administration’s sharpest critics on the economy, including New York Times columnist Paul Krugman and Columbia University economist Joseph Stiglitz. Over a roast-beef dinner, Obama listened and questioned while Krugman and Stiglitz, both Nobel Prize winners, pushed for more aggressive government intervention in the banking system.

But is Obama really all that more open to dissenting views than Bush? After all, Paul Krugman and Joe Stiglitz are both considered to be on the extreme left of the economic spectrum. In addition, every economist on Obama’s economic team is atleast left-of-center, with many considered to be far left. The dinner would have just lead to Obama hearing yet another argument from the left.

It would be tantamount to Bush inviting William Kristol and Charles Krauthammer over for dinner to discuss the Iraq war. Would you describe such a meeting as Bush ‘demanding fresh thinking and avoiding the sycophancy that comes with the Oval Office.’? I certainly would not.

If Obama really wants to break his economic bubble, he should invite economists from the right-of-center over for dinner. There certainly is a plethora of economists who disagree with him and his economic team, see here, here, here, here, here, here, here, here and here – just to give a few.

Good News: Compton Is Getting Better

Alot better, says Newsweek:

For nearly a decade, the entrance to the city of Compton, Calif., just off the 91 Freeway, was a huge, vacant lot, overgrown by weeds. Surrounded by an eight-foot steel gate, the once-bustling auto dealership had become a haven for the homeless; a place where people dumped trash, loitered, caused trouble….

By the 1990s, the mere mention of the name Compton had become so toxic that the nearby southern California suburbs had the city of 100,000 erased from their maps. Its schools were crumbling. Drugs were rampant, and street-gang tensions had escalated into what historian Josh Sides describes as “a brutal guerilla war.” The city became the U.S. murder capital, per capita, surpassing Washington with one homicide for every 1,000 residents—and the details were numbing…

Two decades later, Compton has a new lease on life. The community is still poor, and unemployment is more than twice the national average. But the number of homicides is at a 25-year low, slashed in half from 2005. There are fewer gunshots and more places for kids to go after school. Alongside the liquor stores and check-cashing stands are signs of middle-class aspiration: a T.G.I. Fridays, an outbreak of Starbucks and a natural-food store. Along the way, blacks became a minority in Compton, which is 60 percent Latino today.

The article puts too much emphasis on political and community outreach solutions. It’s been my experience that community outreach programs do little if any good, their success stories are usually with people who were already on the verge of getting out anyway. Think of the the marginal gangmember who has had enough and is looking for a way out – a community outreach program gives him the resources he needs at just the right time. All valuable work but hardly anything that could change a city around. The gun buyback programs are even more of a joke. They rarely result in any real usable handguns. It’s usually guns that don’t work, are damaged in some way, or have a murder on them and unlikely to sell for anything of worth on the streets. Basically, the type of guns that drug addicts give up in exchange for $20 worth of crack. It makes sense too, who would exchange a gun they could sell on the streets for three to four hundred dollars, for a $100 in “supermarket cards”?

My guess is that this is the result of something more fundamental: changing demographics. In the 1980’s it was crack cocaine and starting in the mid 1990’s it was the race wars between the black vs mexican gangs.  Now that Latinos are more than 60% of the cities population, we are probably seeing a new equilibrium reached with Latinos at the top of the gang power structure, which results in significantly lower levels of violence (the struggle for the top is now over). It also doesn’t hurt that most of the gangmembers who were actively involved in the race wars of the late 90’s are now dead, in prison or have left the area. Add in the fact that crack cocaine and gangbanging itself has fallen out of fashion, and you have a whole new Compton.

Of course this does not mean that Compton is headed towards a continuously decreasing violence rate.  After a few more years new gangmembers wanting to make a name for themselves will take the place left by the older ones and with that will come another wave of violence as one gang tries to take over more territory from another one. But I don’t expect anything like the violence of the 1980’s and late 1990’s, unless of course some other fundamental change hits Compton – like a new drug or demographic shift. All in all though, this is still very good news indeed.

Another Mexico Trip

I leave to Monterrey, Mexico in a few hours. I should be back on Monday. See you then.

Understanding Financial Markets

For those who want to get a deeper understanding of the financial markets, Yale University provides Yale economics professor Robert Shiller’s (one of the leading authorities on financial markets) course for free, as part of its Open Course list.

The video for the courses along with syllabus and homework material can be found here.

Obama Watch – President Elect Version

I am going to periodically give my thoughts on Obama’s actions, appointments, and anything else I may find interesting, with an overall rating on his performance. Today, I give you the President Elect Version.

Obama’s decision to invite Rick Warren to give the invocation at his inauguration has been much talked about. Some people call it a shrewd political move, others call it the first of an attempt at party realignment, and then there are those who call it a betrayal. However, what interests me the most about the move is its relationship to Obama’s political views.

As I pointed out in my post, Thoughts On The Obama Victory, Obama is not the type of liberal the presidency is used to; he has a large appreciation and experience with inner city liberalism. Though inviting Rick Warren would have been anathema to limousine liberal’s like John Kerry, Hillary Clinton, Al Gore and Bill Clinton, it’s almost a natural choice for an inner city liberal. Inner city liberalism is comfortable, even full on accepting, of evangelical Christianity, where Limousine liberalism is certainly not.

And so Obama’s choice of inviting Rick Warren gives me hope that he will, as I expected him to but was not sure, leave his distinguishing mark on the presidency, not just by being the first black president, but by being the first inner city liberal the presidency has ever seen. The next four years are sure to be interesting and Obama’s pick of Rick Warren is already starting to draw the lines, separating the limousine liberals from the inner city ones.

Then comes Obama’s economic team. Before the election one could make arguments on both sides that Obama was either an extreme liberal playing the center just to get elected or a true moderate who was willing to listen and follow what worked. Obama’s economic team is outstanding, and shows that those who held the view that he was a moderate were right. I can’t see how McCain could have ever picked a better economic team.

With that said, as of this point in time, I give Obama a clear A. He is shaping up to be a great president. Hopefully that won’t change.

Leaving To Guerrero, Mexico

Though most of my family was born and raised in a small town in Guerrero, Mexico, I personally have never been. As a child my dad would make fun of me saying that I would never survive more than a couple days. Where he grew up they still didn’t have electricity, hot water, or most of modern technology we live with today. Then there is the mosquitoes, the heat, and the food. My dad said that I’m too accustomed to the comforts of the United States to really appreciate it there.

Well, come later tonight I am about to find out. Because of the passing of my grandfather who still lived in the area, the rising violence, and the overall tole the twice yearly trips are taking on my aging father, my dad decided to sell his long held ranch and say a final goodbye to the small town he called home for the first twenty years of his life. And since I can’t take any classes this quarter because of my unborn childs due date, I have a chance to go and finally see the area that has shaped my families early years before my dad finalizes the paperwork on his ranch.

So tonight me and my close friend Albert leave from LAX bound to Mexico where we will take a bus and meet up with my father, who has already been there since last Friday. Plans are to tour the neighborhood, meet uncles, aunts, and family that I have never met before, see his ranch, his house where he grew up, and hopefully get a chance to go into Acapulco and party like its 1999. 😉

I’ll be back on November 9th. Oh, and, about the election, I mailed in my ballot weeks ago. Go Bob Barr!

The VP Debate

No analysis here because I was not able to watch it. I was at a breastfeeding class for my soon to be newborn son (my first kid). 😀

I’ll find it on youtube and write about anything that catches my attention.

Who To Vote For? My Analysis

Here is my thought process on who I am voting for and why. I use numerical values to show what is important to me and by how much. It should also be noted that these are my views today, tomorrow they may change.

Barack Obama

Economic Instincts: Obama strikes me as an overall open minded person on economics. He seems much more willing to trust his economic advisors and is open to different economic points of view.

This shows, for example, in his pick of economic advisor’s. Austan Goolsbee is a top notch economist in the University of Chicago mold. The same can be said of many others on Obama’s economic team – in other words, you can tell that Obama put alot of thought in who should be his advisor’s, and listens to them carefully. +10 Points

Economic Ideology: Because Obama is a democrat, you can expect pressure on him to pursue many misguided policies. Whether we are talking about free trade, unions, or more government healthcare, his party will pressure him hard to deliver. – 8 Points

In any other political environment, this alone could cancel out his positive economic instincts above but because we are likely headed into a recession and the debt from the financial bailout is likely to significantly add to an already out of control budget deficit, Obama will be severely limited in the liberal policies he wants to accomplish, especially in the healthcare area. So this further constrains his economic ideologies push and limits any far reaching program Obama may want to adopt. +5 Points

Minority Issues: I think electing a black president will send a strong signal to minorities that racism really isn’t what it used to be. In other words, one of the side effects of electing Obama to the presidency will be in furthering the conservative argument, namely, that racism plays a low roll in minority poverty, see here, here, here and here. In addition, I think Obama is more able to get the message out that the US is the land of opportunity and that so long as you remain committed and focused, you too can escape poverty, see here. +12 Points

Message To Republicans: Whether we are talking about corruption, fiscal irresponsibility, or just arrogance, it is clear that the Republicans in office did not live up to the ideals they claim to hold dear. Removing them from office sends a strong message that the citizenry will not tolerate this and will – hopefully – bring the Republican party back to its original roots. +5 Points

Joe Biden: Many things rub me the wrong way regarding Joe Biden and the thought that he may one day become president really bothers me. – 5 Points

Hillary Clinton: Many things rub me the wrong way regarding Hillary Clinton and the thought that she may one day have become president really bothered me. Obama removed that threat, and I feel some obligation to thank him for that. In addition, the election of him to the presidency almost guarantees that she will never become president. + 5 Points

John McCain

Education: John McCain seems much more likely to do something positive regarding education. He has publicly admitted to supporting vouchers, and his education philosophy is centered around what is most likely to have a real impact on education: competition and choice.

This is no small matter either, as education is the ticket out of poverty and the area where policy can have the most dramatic effect on minorities living in bad neighborhoods. +12 Points

Judges: Given that the oldest judges on the Supreme Court are liberal, with the oldest being 88, the chances that the next president of the United States will pick a judge are almost certain. McCain is much more likely to pick a justice that does not believe in pushing her/his moral views down the throats of voters. A judge that believes that moral issues should be settled by the democratic process, as opposed to judicial fiat by unelected justices. Given the critical make up of the court, just one liberal justice replaced by even a moderately conservative justice can dramatically change the future opinions for years to come – long after Obama or McCain have left the presidency. +12 Points

However, given McCain’s maverick streak, his reluctance to support Alito, and more importantly, his support of the McCain-Feingold Campaign Reform Act that, IMHO, reduces the civil liberties of the citizens (see here, here and here), leads me to believe that McCain will pick a justice who is either moderate, or at the least dubious on civil liberty issues. At the very least, he will want a justice that supports his campaign reform act, which would likely be a candidate that ranks overall civil liberties low. – 6 Points

Divided Government: There is something to the argument that a divided government is a better government. Electing Obama will give too much power to one political party. We learned this when Republicans were in power and will, I am sure, learn it again when Democrats have the same power. +5 Points

Sarah Palin: I really like McCain’s pick for VP. As I argued here, based on her income, background, and life experiences, IMHO, I believe Sarah Palin to be the closest candidate to “everyday people” than any other presidential candidate in my lifetime. If she were to become VP, and maybe one day President, I believe she has a real chance of reforming the Republican party and bringing it closer to its roots of middle class and everyday working people, bringing a further divide from the elitism of the Democratic party. +5 Points

Economic Instincts: McCain seems an overall populist on economics and when you mix that in with his stubbornness and maverick image, you get a dangerous mix. Whether we are talking about Pharmaceutical drugs, regulations, or tax cuts, McCain strikes me as someone that when he makes up his mind on something, he will pursue it, no matter what his economic advisor’s tell him. – 10 Points

Economic Ideology: Though because McCain is a Republican and his Republican party is generally the more pro-growth party, you can expect this to be a check on his tendencies. Though, as the Bush presidency showed with the Medicare benefit for prescription drugs, I wouldn’t put too much weight on this check. + 3 Points

Free Trade: Though I don’t think Obama’s advisor’s will let him be much of a threat to free trade, I do think that on this important issue, McCain has the slight advantage. +1 Point

Health Care Reform: As Obama’s economic advisor’s have admitted before becoming Obama’s economic advisors (see more here, here and here), McCain’s proposal to break the link between employer and health insurance is a good one. More on why here. + 3 Points

Issues that are a wash between the two candidates:

Immigration: I don’t think there is a big difference between the candidates on immigration. McCain’s political party may push him towards anti-immigration but McCain, as was shown in the primary race, is not too malleable on this issue. In addition, though I see Obama as overall in favor of immigration, his ties to black America may also push him to favor some anti-immigration policies (remember, poor blacks are the biggest losers of all when it comes to more immigration). Though I don’t see this as very likely, it atleast cancels the risk that McCain will move towards anti-immigration as well.

Foreign Policy: On the one hand, McCain seems much more likely to do what it takes to make Democracy succeed in Iraq but seems like much more of a hawk than I’d like. On the other hand, Obama seems knowledgeable enough on foreign policy and, contrary to what many may think, strikes me as someone who will be pragmatic on foreign policy issues and Iraq in general (he already has distanced himself from the loony left).

As you can see by the numbers, the election remains close.

In Praise Of Personal Interest

One of the many things I dislike about Chicano Studies as a major is its over emphasis on “nonprofit activism” vs “personal interest”. In the status circles of Chicano Studies students, you are admired more for your desire to ‘build a community outreach center for disadvantaged children’ than for say, getting an engineering degree and ‘making the big bucks’. Obama’s recent graduation speech at Wesleyan University reminded me of that. My strong dislike stems from the belief, based on three reasons, that the emphasis is counterproductive and winds up harming more than helping.

First, it is the wrong message to give to the poorest members of society who have very little to fall back on. If an upper middle class white kid decides to go into nonprofits that kid is accepting a lower standard of living than the one she grew up with but it is far different than a kid from a low income background. Even without financial assistance from the parents, the upper-middle class kid knows that if some financial disaster results, her parents can step in and help. Then there is inheritance, vacation assistance, and other perks that come with having upper middle class parents.

On the other hand, a kid from the ghetto is taking an enormous risk by accepting a low salary. They are, in effect, “putting all their eggs in one basket”. And unless they are the lucky ones, they are doomed to rear their next generation of children in the very same environment they were raised in (I was shocked to hear of a Phd in Chicano Studies buying a house in Compton…you have to have a Phd in Chicano Studies to consider that progress). As I tell my family and friends who are entering the college age, “Leave the charity to the rich kids”.

Second, it is inefficient. Minorities in education, in community outreach, and in most other nonprofits are literally “a dime a dozen”. Another minority, because of diminishing returns, is not likely to make much of a difference. Factor in the effectivity of community outreach (very low) and the contributions that minorities in education add, and you are looking at near insignificant levels of added value.

Contrast that to the number of minorities in the for profit fields like engineering, chemistry, and technology. They are a scarcity and companies are thirsty for more. In short, you are likely to do more good for yourself and for the community as one additional engineer than as one additional member of a community outreach program.

Third, and most importantly, the two are not mutually exclusive. Making more money gives you more choices. If charity is your goal, you are likely to do more good by making alot of money than being just another ‘worker bee’. When I explain this to my friends I use the analogy of Warren Buffet. I ask my friends, imagine if someone had convinced Warren Buffet to abandon what his talents are especially good at and pursue a career in nonprofits, or teaching, or politics? Now, billions later, he can do much more for charity organizations by funding the most efficient ones then by simply being another ‘worker bee’.

In other words, again if charity is your goal, with extra money you can provide valuable resources, fund efficient charities, be a stronger role model to the next generation (three people in my family want to be engineers now, just because of my experience), provide a better future for your children, assist your family out, or, just as importantly, be a testament to those around you that hard work and dedication pay off, that there is a way out of the ghetto.

Lastly, unlike nonprofits, even if altruism is not your goal, capitalism works in such a way that when pursuing personal interest “you are led, as if by an invisible hand, to do things that improve the lives of others”. So I say to the next generation of students, please, ignore your Chicano Studies peers, ignore Obama, and ignore anybody who tells you that making money is somehow less respectable. Your children, your family, and maybe even some charity organizations will thank you.

The Argument Against Regulations

Bacon-wrapped hot dogs are common in downtown Los Angeles and especially in Mexican border cities. Tijuana, for example, has a vendor at almost every corner. Well now, apparently, Los Angeles is trying to ban the cart sale of these very delicious bacon-wrapped hot dogs.

As a huge fan of bacon-wrapped hot dogs (I’ve eaten more than ten in one TJ night before), I couldn’t pass up the opportunity to use this recent regulation as an argument against regulations in general (though not all regulations). It is a perfect illustration of the standard argument against regulations: reduces consumers choices, benefits the well-off and established sellers, and harms competition. All, of course, in the name of saving the consumer from himself…government paternalism at its finest.

However, those of us that eat bacon-wrapped hot dogs in much less regulated settings (Mexico, for example) know who these regulations really benefit (not the consumer!).

Going To Cancun, Mexico

…for spring break and all I’m going to say is that it’s not to see the pyramids. 😉 I’ll be back Tuesday.

[youtube:http://www.youtube.com/watch?v=m5LX16zia2k]

Environmentalism: Luxury Of The Rich

Going through the trouble of getting my smog check this weekend reminded me of one of my pet peeves in politics: wealthy environmentalists feeling moral about themselves while others (primarily the poor) pay the burden.

Here in California, in order to register your car you have to get a smog check every two years. They typically start around $50/car and go up from there, depending on the size of the car. However, if your car has the ‘service engine soon’ light on, for any reason, it will not pass smog. No ifs ands or buts. On top of that, if you are lucky enough to get your car serviced, thereby removing the ‘service engine soon’ light, you still can’t smog your car…you have to drive it around for a few days, under different conditions, for atleast 20 miles before you even have a chance to pass smog.

Luckily for me, I can pay my mechanic (a family friend) to drive to San Diego and replace the part needed to remove the ‘service engine soon’ light. But I am reminded of how difficult and terrifying this situation was when I didn’t have that luxury. When I was growing up, I had (like most of my friends and neighbors) a cheap, used, beat up, automobile, and the thought of having to pay the cost of bringing it up to smog was terrifying. Most of the time we would simply buy off the smog check operator. Giving him $50 on top of the smog fee to get him to do what was needed to ‘pass’ the car. California has gotten smarter about that and I hear now, it’s near impossible to fake a ‘pass’ on smog (though I haven’t needed to try). So if you have an old, beat up, car that you use to get to work and pick up your groceries with, one that is vital to your parenting, income and free time, and and it doesn’t pass smog – too bad for you (don’t get me started on the ‘assistance’ offered either), it’s time to take the bus (and even here, environmentalists will cheer, as greater use of buses is encouraged). Yet, how many rich environmentalists do you think would even have to deal with a smog check problem?

The smog check is just a minor reminder of environmentalism in general: it is a luxury of the rich. The richer you are, the more you can afford to be an environmentalist. Whether we are talking about environmental land regulations, emission regulations, a gas tax, or any other contentious environmental issue, the costs are usually disproportionately paid for by the poor.

Nothing demonstrates this better than looking at the trends in global poverty and environmentalism. David Friedman writes:

For someone in favor of helping poor people, the economic development of China and India is arguably the best news of the past fifty years. Development was, after all, the explicit goal of foreign economic aid, development planning, a variety of programs in the post-war period that were supposed to lift the third world out of poverty–and didn’t. The fact that more than two billion people are now in the process of moving from extreme poverty towards the sort of life westerners have long lived represents an enormous improvement in the condition of the world’s poor.

It also represents a sharp increase in the consumption of depletable resources and production of carbon dioxide.

Take China as an example, a country where millions of people are moving out of poverty yearly. Great news for those interested in poverty. But bad news for environmentalism, as China moving from rural agricultural society to urban industrialized society means they will burn alot more coal (coal being one of the cheapest sources of energy), thereby increasing the production of carbon dioxide. Some environmentalists, seeing the contradiction try to get around it by making an argument that the environmental impact affects China (and poor areas in general) the most, but this pales in comparison to the economic impact that environmental regulations would impose. Economic development, in many inherent ways, is really at odds with environmental development.

Of course this means nothing to the wealthy environmentalists living in the comfort of the wealthiest countries in the world. Being outside the realm of absolute poverty gives them the luxury to be environmentalists and pontificate on the ‘evils’ of global warming. People in China on the other hand, are more concerned with feeding their children and reaching the standard of living that we in the west have long enjoyed.

The same general pattern applies here in the United States. The higher up on the income ladder you are, the more you can afford to be an environmentalist, and the rest of us have to hear your moral tripe and – worst of all – pay for it.

For more on this go here, here, here, here, and here.

Latino Bloggers Are Different

One thing I noticed after the primary results came in last night is how different bloggers are from everyday people – especially latino bloggers.

If you were to count who latino bloggers were going for the vote count would be very one sided towards Obama. Whether it is liberal, very liberal, moderate, or conservative moderate, almost every latino blog I read – and I read ALOT – was going for Obama. Yet the primary results show the near opposite, the majority of people – and the vast majority of latinos, went for Hillary.

Liberal commentator Matthew Yglesias says it best:

Based on the exit polls in California it seems we could be looking at the very unusual situation of Obama winning white voters and black voters and nonetheless losing the state thanks to Hillary Clinton’s large margins among Latinos and Asians…Time was winning whites and winning blacks was by definition the same thing as winning.

Personally, I think this has less to do with Obama and more to do with Hillary – it has been my experience that latinos, especially lower income blue collar latinos, love Clinton, and Hillary benefited from that.

In any case, this just goes to show that if you want to understand the latino voter, if you want to see what political issue is of primary concern to latinos, the latino blogosphere is probably not a good place to look.

Paradigms Of Poverty

If you put three economists in a room together one liberal, one conservative, and one libertarian and discussed minority poverty and its causes, how would the discussion unfold? After many years of reading about this topic from various sources, I have come to believe that the break down would look something like this.

The liberal economist would focus more on external causes – institutional racism, racism in general, and the overall affects society has on those in poverty. The solutions to poverty should be immediate and tend to be monetary in nature – so you get welfare, government programs, and lower taxes for the poor.

The conservative economist would focus more on internal causes – the breakdown of the family, the divorce rate, drugs, and overall cultural influences. The solutions to poverty should be long term and tend to focus more on changing the culture – so you get things like Bush’s faith based initiatives, changes in the welfare system so that it doesn’t reward divorce and occasionally something as creative as this.

Thomas Sowell summarizes the conservative economist well when he wrote:

The greatest dilemma in attempts to raise ethnic minority income is that those methods which have historically proved successful — self-reliance, work skills, education, business, experience — are all slow developing, while those methods which are direct and immediate — job quotas, charity, subsidies, preferential treatment — tend to undermine self-reliance and pride of achievement in the long run.

With this in mind, it is easy to see why many conservatives dislike affirmative action.

Up until now the conservative and liberal economist both had a place for government in solving the problems of poverty – whether the problem was internal or external, racial or cultural, government played a role. The libertarian, on the other hand, would have none of this. The libertarian solution to poverty would involve much less (many would argue none at all) government assistance. Though the solution (significantly limited or no government interference) is the same among libertarians, they have strong disagreements among themselves as to why that solution is optimal.

Soft libertarians will argue along the same lines as conservatives, stating that government interference is innately inferior to a free market at solving problems since no matter how you structure the assistance, it will always have a negative affect on culture and promote destructive behavior. So in the end, government assistance is like a dog chasing its tail only that with each spin of the dog the poverty gets worse and the costs more expensive. In addition, a soft libertarian sees a strong state and a strong family as incompatible. If you increase one, you will reduce the other.

For example, Arnold Kling, writes:

Most Western nations have created a cycle of dependency with respect to single motherhood. Government programs, such as welfare payments or taxpayer-funded child care, are developed to “support” single mothers. This in turn encourages more single motherhood. This enlarges the constituency for such support programs, leading politicians to broaden such programs.

He quotes approvingly, this post from Phillip Swagel on social security:

“It is convenient for us who are young to forget about old people if their financial needs are taken care of…But elderly people want and need attention from their children and grandchildren…This, then, is the ultimate trouble with the government spending other people’s money for the support of one part of the family. Other people’s money relieves us from some of the personal responsibility for the other members of our family. Parents are less accountable for instilling good work habits, encouraging work effort…Young people are less accountable for the care of particular old people, since they are forcibly taxed to support old people in general.” (p. 116-117)

Since the family is better suited to deal with these problems than an impersonal state, in the long run this results in a reduction in efficiency and increase, not decrease, in poverty. It is this aspect of government interference that soft libertarians are attune to. For examples of solutions to poverty proposed by soft libertarians read this, this and this.

Hard libertarians, on the other hand, are in a category all on their own. Like libertarians in general, they share the belief that government has a very limited role to play in solving poverty but they take it one step further – in addition to cultural forces, they include IQ. From my reading of the literature, this breaks down into two somewhat independent parts. The first is the strong correlation IQ has with success. The second is the link between IQ and race.

The first point, the strong correlation of IQ with success, seems to be generally accepted. For example, Greg Mankiw, professor of economics at Harvard comments on a paper discussing this very thing:

Among a group of adopted sons, which is a better predictor of high education and high earnings?

(a) Having highly educated biological parents.
(b) Having highly educated adoptive parents.

According to results in a new study of Swedish data from Anders Björklund, Markus Jäntti, and Gary Solon, the answer is (a).

The results in this paper seem broadly consistent with those of Dartmouth economist Bruce Sacerdote, who examines a completely different data set in which adopted children were assigned randomly to parents.

In both papers, nature is stronger than nurture for determining the educational attainment of adopted children, although both nature and nurture have some role. And in both papers, nature completely dominates over nurture for determining income.

Nobody is arguing that IQ is everything, only that it is the strongest predictor of income, much more so than any other single data point you can provide. Hard libertarians will take this one step further and connect it to race, arguing that poverty in the United States, to a large degree, mirrors differences in IQ. For example, why are blacks and latinos disproportionately represented at the lower income levels? Hard libertarians would argue that it’s because blacks and latinos are disproportionately represented at the lower end of the IQ spectrum. For more on this and how it influences the role of government programs, see this, this, this, this, this, this, this and this.

The last link discusses what impact IQ should have on government programs. The link states:

Does it matter that IQ matters? Of course! An investment in education that looks extremely profitable if you don’t control for IQ could easily be a big waste of money. The reason: If you don’t control for IQ, you are giving education a lot more credit than it deserves. To say “Let’s focus on the things we can change” dodges the hard truth: After you adjust for what you can’t change, the things that you can change may give you very little bang for your buck.

Thus, IQ is highly policy-relevant after all. The left-wing ideologues who damn anyone who even thinks the letters “IQ” are actually on to something: IQ research does turn out to be a rationale for “right-wing” laissez-faire policies. The more IQ matters, the more likely it becomes that existing government policies are a waste of money – and that you would get a bigger payoff by doing less – or maybe nothing at all.

There are several arguments, convincing IMHO, one can make against hard libertarians (Thomas Sowell, most notably, making the strongest one, see here) though admittedly I have not spent much time looking closely at the disagreements (yet). My point here is not to say who is right and who is wrong, to defend one and criticize the other, only to outline, as best as I can, what the differences are in assumptions between the various schools of thought. For even when you get all of the economics correct, the initial preferences are still very different and shape a good portion of the debate.