Signals v Causes: The American Nightmare?

An effective political and election strategy has been to identify the signal of the American dream (e.g. home ownership, college education, preschool) as a cause of the American dream — or the American dream itself, and then promise to make it easier for people to achieve it.

Hopefully, we are learning that this actually undermines the incentives and feedbacks that made those things signals of the American dream in the first place, turning them into nightmares.

It turns out that getting a college degree doesn’t cause the American dream. Rather, all the hard work and gumption that use to go into getting the relatively more scarce and useful college degrees of the past was truly what set those kids apart and put them on the path to prosperity and independence.

Change the college degree from a sorting out mechanism to an easy path and the college degree no longer is a reliable signal of those hard workers to employers. Then the nightmare ensues.

As this Wall Street Journal editorial describes:

A lot of these borrowers can’t generate the income to service this debt, especially when so many of them can’t get decent jobs. The left-leaning Center for Economic and Policy Research recently noted that among recent college graduates age 22-27, a full 45% were underemployed in 2013, meaning they were either unemployed or doing jobs that typically don’t require a four-year college degree.

Of course, it doesn’t help that politicians have also mucked with the incentives of the innovation economy, reducing its capacity to create job opportunities for these folks.

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I think we’re on the second envelope

Ever hear the story of the new CEO that was given three envelopes by the previous CEO to open in case he ran into a problem?

The note inside the first envelope said, “Blame your predecessor.”

The note in the second said, “Reorganize”.

The last said, “Prepare three envelopes.”

I think the President must get three similar envelopes. He already used the first one. But the second one must say, “If everything that has your name on it is turning into unmitigated disasters, then say you are going to raise the minimum wage.”

But, the good news is that we are getting close to the third envelope.

Just a reminder

With Obamacare, here we again find ourselves with a government-made disaster on our hands. There’s much discussion about how ‘we’ fix it or change it, how to make it workable, how the GOP has no solutions…etc.

I hear very little discussion about why we even want these buffoons to touch this stuff.

It’s a good time to remind folks of some wise words from Walter Williams.

On my mind

My post from October 2 has been on my mind quite a bit lately.

So rare is it for politicians to be around when the their grand plans — and the inevitable messes — come to fruition. Usually they are remembered for the intentions their plans had, but distant memories by the time the real trouble hits.

Now, one month after that post, the disingenuous ‘accountability-taking’ seems to be taking some toll on the administration’s credibility.

Now, we are entering the next phase…the time when people find out how their 2014 Obamacare plans compare to the 2013 non-Obamacare plans. I finally got a peek at my company’s insurance plans for 2014 and my premiums appear to be going up, not down. Wasn’t this supposed to be reducing the cost of health care?

Conflict of interest? No, can’t be.

I recommend reading, Does Government Dependence Influence Voting Behavior? by David Waciski.

I’m always skeptical of data and statistics, even those that confirm biases. But, I found this interesting.

First, Waciski starts with a great quote from Alexis de Tocqueville:

The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.

Later, he writes why looking at state level voting data to determine if voting is influenced by government aid can be misleading. Since there are lots of reasons why people vote, looking at too big of groups of people to answer the question, assumes that the noise caused by all the other reasons can be ignored. It can’t.

My favorite example of this aggregation phenomenon comes from academic research. Statistics always shows that individual-level data (like parent status or number of books in home) explains variations in individual student academic performance better than aggregated data like schools or school districts. No duh. Even in ‘good schools’, there are A students and F students, so just about any data that exists at an individual level will naturally have more individual level variations than any data that exists at a group level.

To picture this, imagine art with Legos. The smaller the Legos, the better the artist is at being able to reproduce the recognizable variations in their subject.

Finally, Waciski concludes from looking at precinct level data, instead of state level (smaller Legos), on voting and government aid:

On average, every one percent increase in the number of households receiving federal assistance resulted in a two percent increase in the vote received by President Obama.

I think “…resulted in…” is a bit strong here. He has found a relation between two sets of data, but that isn’t enough to establish cause. Though, it is enough to say that cause is a possible explanation for the relation.

And, I think it’s a probable explanation, because it is easy to identify the mechanism that might convey the cause: 

Unsurprisingly to those who understand human nature, the recipients of federal aid have a strong propensity to support the politicians who provide that aid.

In just about any other walk of life, most people aren’t surprised when other people act in their own self-interest. Yet, somehow, it couldn’t possibly be when it comes to voting?

 

I agree with Barack Obama?

Driving around at lunch today, I heard a conservative talker on the radio play an Obama sound bite where he said something like, For those who don’t agree with the direction we’re going, make your argument and get out and win an election.

The conservative talker attacked this by saying that the conservative congressman and senators did win elections.

But, I know what Obama meant. Don’t just win a half of one branch of government. Win at least one branch.

I agree.

For those who don’t like the direction government is going, the issue isn’t Barack Obama or any individual in the House or Senate. It’s that more people voted for them. Those voters seem okay with their politicians making up the powers of government as they go along.

Even if you didn’t vote for Obama or a Democrat, there’s a good chance that you voted for a Republican that isn’t much different.

When you hear someone say that a politician is more worried about getting re-elected than doing what’s right for the country, there’s an overlooked truth in there that says more about the electorate than it does about the politician.

Disagreement and compassion

Seth Godin on ways to disagree with people. He identifies a marketing problem, a political problem and a filtering problem.

I think there is also an identification problem: When someone agrees with you, but won’t admit it because it doesn’t fit in with how they self-identify. But, if I admit that I wouldn’t be in the compassionate crowd, for example.

Steven Landsburg has help for such people. Here’s his response to a commentator on his blog who cares about coffee shop owners on Capitol Hill who are being hurt by the

coffee and tee

In DC or Nebraska? (Photo credit: Wikipedia)

shutdown but who must be…

…apparently oblivious to the fact that taxpayers also visit coffee shops, and that for every dime not being spent by a DC bureaucrat, there’s an extra dime available to be spent by a Nebraska farmer or a New York cab driver. Our commenter apparently remembered to care about the guys selling coffee in DC but forgot to care about the guys selling coffee in Nebraska.

The single biggest lesson that economists have to teach is that it’s important to care about everyone, not just about the people who happen to cross your path.