Tag Archives: government

Corrupt Democracies

This story is going viral: Europe’s traditional left is in a death spiral. Even if you don’t like the left, this is a problem

The entire article can be read here

The decline of the center-left has contributed to Europe’s contemporary economic and political problems and hindered finding viable solutions to them. The left is no longer able to play its historic stabilizing role.

After World War II, European societies were built on principles that owed a lot to center-left ideas. There was widespread agreement after the war that the political chaos and social upheaval associated with the Great Depression had been the consequence of unregulated markets, so the idea that they should be left unregulated again was an anathema. And so, when European political economies were rebuilt, they were designed to ensure that capitalism was reined in by governments. This postwar order worked remarkably well: The three decades after 1945 remain Europe’s period of fastest growth ever.

Politically, this order’s effects were equally important. Workers and employers became more willing to cooperate, and in place of the centrifugal dynamics of the interwar years, when tough times drove voters to the extremes, good times during the postwar years drove voters back to the center. Thanks to a new relationship between democratic governments and capitalism, Europe was able — for the first time in its history — to combine economic growth, well-functioning democracy and social stability.

Just because strong growth coincided with more regulation does not prove regulation helped growth. This is a simple confusion of cause and effect, that is all too common in journalism.

Although the Great Depression was a setback, the author ignores the decades of growth that preceded the depression. There is no statistically significant evidence that unfettered free market capitalism is a net-negative on economic growth. Although this may lead to more boom-bust cycles, the net gain afterwards is still positive in terms of new technologies, increases in productivity, and new businesses. When the technology bubble burst in 2000, the technologies themselves didn’t go away. The left assumes that asset bubbles, when they burst, undo all prior gains, but this doesn’t happen often. Also the Depression had more to do with an overvalued stock market and poor policy that made the depression worse, than deregulation.

Also, as quoted by Milton Friedman, you cannot have both a welfare state and open borders.

The fact that authoritarian economies and societies (UAE, Saudi Arabia, Singapore, etc.) have seen significant economic growth and expansions in recent decades further douses water on the author’s thesis that a liberal ‘social order’ is a necessary ingredient for strong economic growth. By contrast, South America and Southern Europe, both which have democratic governments, have had decades of corruption, for example Brazil and Venezuela:

Corruption is an important part of Brazil’s politics. For years, embezzlement and corruption have been involved in Brazilian elections, and yet the electorate continues to vote for the same convicted politicians.[3]

In 2014 a bribery scheme surfaced within the state-owned oil company that gave the scandal its name. Executives at Petroleo Brasileiro SA (Petrobras) took bribes from contractors and funneled money into the campaign funds of the governing political parties.[4]

Just going through a 1996 edition of Time magazine, a feature story, War Against Sleaze, lists a dozen countries with parliament/constitutional governments that have been afflicted by various corruption scandals typically involving bribery, election rigging, or misappropriation of public funds, in addition to sectarian violence.

Because monarchs are wealthy and have “indefinite political tenure” they are possibly less corruptible than politicians. Northern European countries such as Denmark, Norway Sweden, and Netherlands have monarchies and have among the lowest rankings in corruption:

Some Ideas to Reform Higher Education

Unlike some libertarians, I don’t believe the state is inherently oppressive. I believe in incrementalism, in making small changes to make a better society rather than uprooting society. An example is optimizing the allocation of public resources. We have a finite quantity of capital from tax payers dollars, it should be allocated in such a manner that it will provide the greatest ROI as measured by advancing the canon of human knowledge, responding to and staving off crisis, growing the economy, improving living standards, and advancing technology. Other pro-growth ideas borrow from Reaganomics, such as lowering taxes. Yet, although I acknowledge the government can play an auspicious role as far as public goods such as defense, infrastructure, venture capital and research is concerned, majoritarianism/democracy means people voting to enlarge the welfare state by taking wealth from the most productive and spreading it to the least, a form of slavery in which the productive are exploited by the parasitic. Market-libertarianism, but with some intervention when necessary, is possibly an ideal middle ground in reconciling individualism and freedom with government and the rule of law, a system similar to the one we have today. The government doesn’t need to leave the picture entirely – it just needs to do a better job allocating resources and devising policy, and through small changes not only is this possible, but the government can be a force for good, working in tandem with the private sector.

One of my favorite proposals the high-IQ basic income, along with other proposals. Another idea, and the topic of this article, is some sort of free education for high-IQ individuals as they are the most likely to derive a benefit from higher education. The problem with our current system of financial aid is that:

1. Too many students with financial aid, particularly low IQ students, drop out and or get poor grades – a waste of taxpayer money.

2. Students graduate with too much debt.

3. Existing scholarships and grants are too small, failing to sufficiently cover tuition costs and either excluding too many students or admitting students who are not qualified.

Unlike regular student loan programs, under our proposal they would not have to pay it back. The program could still be a success and less costly than existing programs because high-IQ people are more likely to finish college and only 5% or of the population would be smart enough to be eligible for this subsidy. Present student loan programs are wasteful due to high delinquency rates, creating a vicious cycle of students defaulting, governments offering more money, and colleges raising prices.

The Economist reported in June 2014 that U.S. student loan debt exceeded $1.2 trillion, with over 7 million debtors in default. Public universities increased their fees by a total of 27% over the five years ending in 2012, or 20% adjusted for inflation. Public university students paid an average of almost $8,400 annually for in-state tuition, with out-of-state students paying more than $19,000. For two decades ending in 2013, college costs have risen 1.6% more than inflation each year. Government funding per student fell 27% between 2007 and 2012. Student enrollments rose from 15.2 million in 1999 to 20.4 million in 2011, but fell 2% in 2012.[9][10]

The ROI of my proposal can optimized further by only offering free higher education to high-IQ people who major in a STEM field, or any field that is sufficiently rigorous. Dubious programs, such as child development, would not be eligible. Another idea is to drop the prereq classes, so that a person majoring in math, for example, would not be required to take an anthropology course.

There are so many ideas of how higher education can be improved; another idea which I frequently explore is how solve the problem of credentialism.

College, to some extent, is an IQ test, but a very expensive and poorly designed one. Credentialism can be reduced by replacing costly diplomas with administered IQ tests, SAT , or any inexpensive test that signals cognitive ability, but ultimately any screening program where the results can be interpreted to mean some individuals are smarter than others will be fraught with much controversy, especially if it factors into hiring. The military uses such tests (you can technically have a PHD in math but still not get into the military if you fail their IQ test), but it would be hard to transition this to broader society. Some people are more comfortable with encumbering millions of smart students with debt than conceding that, yes, some people are smarter than others.

A commenter on Scott’s blog replies:

Which credentials do wish to get rid of? I’d rather have an IQ 125 surgeon who went to medical school than an IQ 150 surgeon who was self taught.

Credentialism isn’t only about signaling intelligence. Its a way of ensuring that certain standards in education are being met.

For specific fields credentialism is necessary, but you see credentialism for jobs that obviously do not require an advanced degree. This is because employers understandably want to hire best and the brightest out of a huge applicant pool, and the post-2008 economic environment is one where for most jobs the supply of labor vastly exceeds the demand, giving employers the luxury of being very selective. Smart people learn faster which means less money spent on training, and they are better at anticipating the needs of employers and customers. But such intelligence can be signaled with an IQ, SAT, or a Wonderlic Test instead of a costly diploma. A college degree is expensive and typically takes four years – time and money that could be better spent. That is the issue…students taking on too much debt because employers req. a degree because the degree (to some extent) signals competence, when there are better, cheaper ways of signaling competence.

The trades, for example, typically require certification, which can be obtained out of a higher education setting. This certification can be extended to all career choices, and could sidestep the whole IQ and disparate impact issue. To get a job in IT you must pass the IT test, which contains questions directly relevant to IT. Lower IQ people may not be able to pass the test, but it would not be subject disparate impact since the question asked directly pertain to the IT job. IQ screening is useful if the employer plans to train people on their own dime; employers want trainees who are easily trainable, and studies show high-IQ people learn with fewer repetitions than everyone else. Certification means the person seeking a certificate must get the training, which creates a financial constraint for some people. Giving free training courses to high-IQ people, who are the most likely to complete and benefit from the training, seems like good policy, but again, will be met with resistance by the left.

High school guidance counselors should dissuade individuals who are likely not smart enough to benefit from going to college, even if some of these students otherwise have high GPAs. Or discourage students from majoring in low-paying fields. Unfortunately, IQ tests are no longer being administered frequently except in instances where there is a suspected learning disability, so due to grade inflation many high school graduates, even graduates with modest IQs, are mislead into believing they are cognitively suited for higher education. The SAT used to be an effective screening tool, but political pressure has made it more like a general knowledge test and less like an IQ test, making it less effective at identifying exceptional individuals and assessing college suitability.

There is the National Merit Scholarship and although it does screen for high IQ, a $35 million annual endowment is hardly enough and excludes a lot of people who are smart, but otherwise don’t meet all the qualifications. Since it’s a privately funded organization, understandably its budget is limited compared to the federal government.

Obama’s 2-year free community college plan is a start, but it would perhaps be better to only make it applicable to those of a sufficiently high IQ and offer more coverage, otherwise there would be a lot of waste due to dropouts, while also falling short for those who would really stand to benefit.

The issue is textbooks and other expenses, which aren’t covered under Obama’s plan.

From http://www.brookings.edu/research/opinions/2015/01/20-obama-free-community-college-bad-idea-sotu-butler

For one, the plan is badly targeted. Covering the full tuition of all community college students would mean middle-income, and even upper-income, students would get hefty subsidies, even though many do not need the help. Meanwhile, many lower-income students at community colleges would still not have the money to cover the non-tuition costs, such as books, supplies and transportation – and room and board for those not living at home. These costs usually dwarf tuition at a public community college – annual total costs averages over $16,000, while free tuition would account for only about one-fifth of that. True, lower-income students can qualify for Pell grants, but the maximum this year is $5,730, making community college a financial challenge for many, even if tuition were free.

A solution could be to use Wikipedia-like textbooks curated by Wikipedia editors and composed from Wikipedia articles. These guides could be printed and distributed cheaply.

There are Pell Grants, but they don’t screen for IQ nor, as the passage states, do they offer enough money. The result is that you have a lot of dropouts and insufficient funds to keep up with college costs.

Free 4-year private education would be prohibitively expensive, even if eligibility is restricted to those of the top 1% of intelligence. But to make public education free, according to The Atlantic, would cost $62 billion.

According to new Department of Education data, that’s how much tuition public colleges collected from undergraduates in 2012 across the entire United States. And I’m not being facetious with the word mere, either. The New America Foundation says that the federal government spent a whole $69 billion in 2013 on its hodgepodge of financial aid programs, such as Pell Grants for low-income students, tax breaks, work study funding. And that doesn’t even include loans.

But if the government gave free public education to the top 5% of IQ (>120), that would only cost $3 billion. If restricted to STEM, it would be even less.

So this plan is financially feasible, but would face much bigger ideological hurdles (from those who argue the screening process in inherently racist because a disproportionately small percentage of blacks and Hispanics, who tend to score lower on IQ tests than whites and Asians, would qualify) than budgetary ones.