Thursday, November 15, 2007

Peter Levine's "New Progressive Era"

I had previously blogged about Peter Levine's New Progressive Era when I was starting it. Now that I've finished it, I conclude that my initial reaction was correct. The ideology of the progressives, and of Levine, ignores long run effects; bounded rationality; processes of experimentation that are necessary to innovation; the importance of private property and the private sphere; the importance of individual rights to be free from the progressives' endless taste for attacking the individual; and the importance of free markets to create a wealthy society.

Deliberation and democracy are only beneficial if there are limits set to their scope. As de Tocqueville argued, tyranny of the majority is the chief threat to American democracy.

Having grown up in New York, the state and city where the deliberative state has grown most extensively, I grew up seeing the failure of Levine's ideas first-hand. In New York, progressivism degenerated into Robert Moses's capricious abuse of power. Although Levine argues that the earlier progressives were ambivalent about unions, Levine is very pro-union. In New York, I watched the business base disappear; property values soar to the point of crippling unaffordability; and the growth of the rat population in the subways. (The city had confiscated the subways during the post-progressive era thanks to the moronic deliberation of that era). The City has increasingly become an elite playground that excludes the middle class thanks to the practical effects of Levine's ideas, specifically, special interest pressure to support public sector unions who have fought for high taxes; special interest eminent domain actions that have closed small factories and destroyed inexpensive housing; and the use of urban renewal and the tax system to squelch start-ups that have yet to prove themselves.

Despite its claim to be democratic, progressivism is anti-democratic. It is anti-democratic because it aims to apply democratic deliberation inappropriately to economic issues and so must fail. Levine does not appear to grasp the concept of marginalism or marginalist decision making; nor does he leave sufficient room for the possibility that an artist, intellectual, inventor or entrepreneur might have ideas which the majority would rather suppress because it does not understand them. This has been the consistent failure of progressivism. Deliberation and progressivism are fine in the limited scope of public decision making as defined in the nineteenth century. The slightest expansions make them untenable. In areas like monetary policy, which are not that complicated, special interests leap to make the topics seem complicated, and the public is easily bamboozled. The result is the special interest constituencies, which Howard S. Katz has called the "paper aristocracy" in the case of money supply, who argue vehemently for the "stabilization of credit markets" and similar kinds of meaningless, self-serving nonsense in order to justify public subsidies. The public is deferential toward the quack claims of academics, and so democracy becomes a matter of special interest, privilege and fake authority.

The public is simply not equipped to engage in debates about engineering; economics; architecture; construction; manufacturing, etc., etc. This is understandable because no one has the mental capacity to absorb all of these issues. In arguing for the public to engage in debates about such a wide range of issues, Levine and his fellow progressives are paving the way to totalitarianism. This is not surprising because it happened in Germany, the first country to adopt a progressive policy.

The end result of Levine's progressivism is dictatorship. Far from being a reform movement, the "new progressivism" leads to the kind of totalitarianism to which Bismarck's progressivism led Germany.

There are more than a few evidences of authoritarianism in Levine's book. For instance, Levine implies that those who "admire the market" should not "have disproportionate political power as a result of their wealth". But this kind of distinction leads to suppression of speech. For instance, is it fair that people with higher IQs have disproportionate political power and so can manipulate the government to serve their interests as the financial community has been able to do with the Federal Reserve Bank and as business has been able to do with the department of labor and the federal trade commission? The fact is that Levine singles out business as a manipulator, when the only conceivable outcome of his progressivism is manipulation by special interest groups.

Given the repeated failure of the progressives' ideas, one would hope that their ideas would have been consigned to the trash bin. But their emotional hatred of business, which they cannot dominate and control, inspires their endless speculation as to how to suppress entrepreneurs and those who do not pay attention to their stale ideas.

West Shokan's General Store

The West Shokan Curmudgeon reports that the West Shokan General Store will close. According to the Curmudgeon, the owner of the store, Ruth Marzulli, has:

"offered to compromise on the rent and to extend the initial rental agreement. The Mansfields feel that it’s impossible to make the store viable even if the rent is almost nothing. I’m sure there’s a compromise in all this, but it doesn’t seem that the parties will figure it out."

The Curmudgeon suggests that a group might open the store in Snyder's, a bar famous for appearing in the film Wendigo, which has apeared on the Independent Film Channel and elsewhere.

Babs and Phil Mansfield, who moved up from the city to run the store (Phil is a professional photographer as well as a retailer) have done a great job with the store. The food is very good and they sell alot of neat stuff like milk in the old fashioned glass bottles that is organic (bottled by a local farmer), organic eggs and world-class soups, pot pies etc. The store is much more crowded than it was when Weber owned it and much more crowded than when the Marzullis operated it themselves.

Ruth's late husband Jerry had purchased Weber's store and refurbished it about 5 or 6 years ago. Unfortunately, rumor has it that the price was somewhat too high to be justified by the volume. The economics of the area may be that commercial properties cannot command the prices that would seem appropriate elsewhere, such as New York, because of insufficient traffic. It is understandable that Ms. Marzulli does not wish to rent or sell at a loss, and it is also understandable that Mr. and Ms. Mansfield cannot operate at a loss to cover Ms. Marzulli's cash flow gap.

As the Curmudgeon points out, the store is a major asset to the hamlet of West Shokan. For those who do not drink (Snyder's is a commodious alternative hangout if you do drink)it is the only "third place" to meet others in West Shokan.

Ms. Marzulli would probably be wise to compromise on the rent, especially if the Curmudgeon's concern that the West Shokan post office might close if the store closes again is true. If the p.o. does close, Ms. Marzulli will lose that rent as well as the store's rent. If so, she will be holding an expensive property with no tenant and will have to carry the interest (or imputed interest) as well as pay the taxes and maintain the property without any revenue.

It would make more sense for Ms. Marzulli to cover her variable costs and at least part of her fixed costs by offering the Mansfields a lease at a market rate. By market rate I mean a rate that is limited to the store's net income less a reasonable estimate of profit and wages for the Mansfields. I sincerely doubt that another buyer will be able to generate more traffic than the Mansfields have. Commercial properties on Route 28 in neighboring Boiceville have been sitting empty for years.

Warren Buffett Attacks Middle Class Businessmen and Farmers

On February 14, 2001 BBC News reported that:

"A group of the United States' most wealthy citizens have urged Congress to reject a plan by the new Bush administration to phase out taxes on estates and gifts by 2009...A petition, to appear in the New York Times on Sunday, is being organised by William Gates Sr, father of Microsoft chairman Bill Gates...Around 120 rich Americans, including billionaire investors George Soros and Warren Buffett, support the petition...Mr Buffett, who himself did not sign the petition because he thought it did not go far enough, said that repealing the estate tax would be a "terrible mistake."

Fox News
reports today that Buffett:

"told the Senate Finance Committee on Wednesday that Congress should keep the estate tax rather than repeal it and help a few rich Americans like him."

When you think about it, it makes sense for America's wealthiest citizens to support the estate tax since it doesn't affect them. There has been an estate tax in effect for nearly 100 years, yet America's wealthiest families have mostly avoided it. In fact, virtually nothing in the tax code is as it seems. The tax code is full of exceptions, regulations, exceptions to the exceptions and regulations that regulate the exceptions to the exceptions.

In contrast, wealthy but middle class businessmen and farmers worth $3 or $4 million have trouble affording legal talent to lobby for or find the exceptions. Not so the Rockefellers. The Gates-Buffett pro-inheritance tax movement is an effort by the very wealthy to attack and impoverish the upper middle class.

Farmers and small businessmen may find that they lack the cash to pay an inheritance tax. Owners of expensive Manhattan apartments may have to throw their less lucky children onto the street because the parents fear that they will not have the cash to cover the inheritance tax on the apartment.

It is logical for the super-rich to favor the inheritance tax because the inheritance tax has never prevented them from establishing trusts. Many of the signers of the Gates petition may do so when the glare of the news media is turned away.

Moreover, cronyism and nepotism, the hiring of friends and relatives as opposed to the best qualified candidate, is morally indefensible. Yet, Buffett has appointed one of his children to run Berkshire Hathaway. The not-so-wealthy can't afford to appoint their children to a corporate sinecure.

The opposition of the super-rich to inheritance is hypocritical for another reason. If the state did not interfere with the money supply and the economy, an inheritance tax would not be so big a problem because asset values would be lower. But it is because the Fed inflates the money supply, artificially depressing interest rates, that illiquid estates are problematic. Apartments and houses that have been in families for generations must be liquidated. Small businesses must be broken up.

Were the Fed to allow interest rates to float to a market level, rates would rise. This would be fair because interest is just the price of money. We do not subsidize the price of shoes to benefit shoe retailers or of cars to benefit car retailers. Why do we need to depress the price of money, interest, to protect stock market investors, Wall Street and commercial bankers? Can't these guys create value in a free market?

Higher, market-responsive interest rates would depress the stock market and make the super-rich less rich. Moreover higher rates would stop inflation from elevating asset values. Thus, farmers' land and New Yorkers' apartments would become less unrealistically expensive.

Messrs. Buffett, Soros and Gates do not lobby for market-driven interest rates. Instead, Messrs. Buffett, Soros and Gates argue for tax code provisions which everyone knows are complex, often unnecessarily complex, frequently dodged and subject to manipulation by the very wealthy. Hence, we must suspect that Messrs. Buffett, Soros and Gates are insincere. If they were concerned about income inequality, they would speak out for market-neutral interest rates, not for complicated enhancements to the byzantine tax code.

Although financiers like Buffett, Soros, Gates et al. have above-average intelligence, this may not be true of all who have built successful businesses. Some may have average intelligence. Their children may also have average intelligence. Why should the hard work of the parents be forfeited? In contrast, because of income taxation, government regulation, licensure and inflation, success in today's world increasingly (and unfairly) depends on the ability to gain entry to Ivy League colleges and obtain a job on Wall Street, as has been the case with Messrs. Buffett and Soros. Mr. Gates attended an Ivy League college but did not work on Wall Street. If the children of Ivy League graduates are more likely to be able to attend Ivy League colleges because of inherited genetic endowment, then they benefit by inheritance tax. They benefit because small owners are forced to sell their family businesses to large businesses such as those that Messrs. Buffett and Soros own. The low interest rates benefit them; and the emphasis on academic scores tends to benefit them. In contrast, the hard working farmer sees the state violently rip his life's work from his children. But this is fine with Mr. Buffett because Berkshire Hathaway is ready to buy at bargain basement prices.

Frankly, I see little moral or respectable in the anti-inheritance or pro-inheritance tax position. Buffett's position is vicious. If the super-rich want to give their money to charity, they have every right to do so. But shouldn't the hard working upper middle class be permitted to shield their children from the rapacity of the marketplace? Or must their children be subjected to the inflationary stealing of a new generation of financial manipulators and beneficiaries of government intervention?

Tuesday, November 13, 2007

Vernon C. Polite's Provincialism

In June 2006 there was a debate about dispositional assessment in which I participated on the website of Inside Higher Education. About eight months later, in March 2007, Vernon C. Polite, dean of Eastern Michigan University's School of Education, added a lengthy comment, which Steven Head has brought to my attention.

Dean Polite begins by arguing:

"If law, social work, nursing, psychology, etc can speak the words, 'social justice,' professional educators certainly need to have an understanding of what social justice means in the preparation of professional educators."

But, of course, an understanding of "justice" is part of the undergraduate philosophy curriculum and can be gleaned in reading authors as Plato, Aristotle, Augustine and Kant, who are covered in any competently run undergraduate program. A graduate school, including one in the education field, need not cover undergraduate-level material. The question of "what is justice?" belongs in undergraduate philosophy classes. That is, unless the graduate school has a program of indoctrination in mind.

Dean Polite launches into a discussion of "minorities" which is not particularly relevant to the question of "social justice" dispositions. While there have been many injustices brought to bear on minorities, the issue of the existence of "social justice dispositions" is a deeper question. To take one example, in Malaysia the majority ethnic group has instituted an affirmative action program that amounts to apartheid-like discrimination against the minority Chinese. The minority Chinese are more economically successful than the majority Malay population, but is discrimination against this suppressed minority group just?

St. Augustine argued that a person's relationship with God is the basis of justice. Are we to accept St. Augustine's definition of justice? Plato argued that justice is rooted in society. But Karl Popper argued that Plato's definition is totalitarian. Are we to believe Plato's definition of justice, or Popper's? Hitler believed that murdering Jews is just. The Ku Klux Klan believed that lynching blacks is just. Whose definition are we to believe? Dean Vernon C. Polite's and NCATE's? Dean Polite writes:

"NCATE, however, could be most helpful to its member institutions by “defining” social justice rather than simply removing it as if it is no longer relevant or suggest that “it” is sufficiently “covered” under diversity. Some would argue that anything found in the NCATE standards should be measurable and observable in the candidates’ performance."

Yet, Dean Polite's cries for enforcing a rigid, authoritarian definition of social justice will lead not to justice, but to harassment of those who disagree with NCATE and with Dean Polite. It will lead to an authoritarian political correctness. Dean Polite further claims that:

"Social justice tends to equalize disparities in educational attainment, educational achievement and socio-economic status, and the impact of prejudice and discrimination on educational attainment."

But this may not be the case. The rigid definition of social justice as equality of outcomes is anything but just in terms of the thinking of Kant, Plato, Augustine, Aristotle and all other important philosophers outside of a few provincial leftists. Indeed, the moral depravity of the New Left is illustrated in its now-aged sociopathic leaders' ongoing defense of the Pol Pot, Mao Tse Tung and Castro regimes, which butchered 1.5 million, 25 million people and 100,000 people respectively.

Dean Polite goes on with a discussion that is remarkable for its provincialism:

"In essence, social justice is the one true ideal that ensures that “no child is left behind.”

Yet, there are many ways to attain the goal of improved social outcomes. In particular, the laissez faire economy of the late 19th century increased wealth dramatically because deregulation stimulated innovation. The invention of the telephone, AC electricity and the mass production of the automobile were improvements that have not been matched since the ideas of the suppressives/progressives, to include government regulation, have inhibited economic creativity. Justice is necessary for the fulfillment of human purpose, which means that government programs, regulation, whimsical legal requirements and pronvicial definitions of social justice ought to be eliminated. Justice means that each person should be permitted to keep what they produce and be free of the violence of political extremists and criminals.

Rules that suppress speech, that attack those who disagree, that expel students like Steven Head who disagreed with his professor are inherently unjust. Universities have been at the forefront of attacking individual freedom in the interest of a rigid, unjust ideology that argues for a logically impossible equality of outcomes. The concept of equality of outcomes that has no claim to "justice". It is a suppressive Procrustean bed that leads to murder. Far from being just, its advocates are killers.

If NCATE is to advocate justice, then it must advocate laissez faire capitalism. The only justice is equality under the law; freedom of expression; and the right to retain one's earnings. The only meaning of justice is:

"Laissez faire et laissez passer, le monde va de lui même!"

Are the New Caucus and Barbara Bowen Taking a Page from Lee Kuan Yew's Playbook?

I have blogged about "Sue" O'Malley's and the New Caucus's attempt to silence Sharad Karkhanis via "Sue" O'Malley's lawsuit (also see here, here, and here). Have the "progressives" of the New Caucus merely taken a page from the playbook of the suppressive retired Prime Minister of Singapore, Lee Kuan Yew?

The following is how Wikipedia describes Mr. Lee's abuse of law suits to suppress and bankrupt political opponents:

>"Singaporeans and foreigners have criticized Lee as elitist and even an autocrat, and that the economic prosperity under Lee was achieved at the expense of much political and social freedom. Lee was once quoted as saying he preferred to be feared than loved...

"Lee has been criticized for implementing some harsh measures to suppress political opposition and freedom of speech, such as outlawing public demonstrations without an explicit police permit, the restriction of the press freedom, and the use of defamation lawsuits to bankrupt political opponents, such as Joshua Benjamin Jeyaretnam, Tang Liang Hong and Chee Soon Juan. On political matters, public opinion was rarely solicited.

"On the above issue, Devan Nair, the third president of Singapore and who was living in exile in Canada, remarked in a 1999 interview with the Canadian newspaper The Globe and Mail that Lee's technique of suing his opponents into bankruptcy or oblivion was an abrogation of political rights. He also remarked that Lee is 'an increasingly self-righteous know-all', surrounded by 'department store dummies'. In response to these remarks, Lee sued Devan Nair in a Canadian court and Nair countersued.[6] Lee then brought a motion to have Nair's counterclaim thrown out of court. Lee argued that Nair's counterclaim disclosed no reasonable cause of action and constituted an inflammatory attack on the integrity of the government of Singapore. However, the Ontario Superior Court of Justice refused to throw out Nair's counterclaim, holding that Lee had abused the litigating process and therefore Nair has a reasonable cause of action. [[5]]. After his death, The Economist published an obituary of Nair which was critical of Lee Kuan Yew. The following issue, The Economist published a letter from a Singaporean official which claimed Nair's drunkenness was a source of his mental disturbance in his latter years. The Economist did not publish other letters that were supportive of Nair due to the reason that the publication would be forced into another lengthy libel trial."

Rather than defend academic freedom, the insiders of the New Caucus and the Professional Staff Congress rely on role models like the suppressive Mr. Kew to silence Karkhanis with a law suit, taking a page out of Lee's playbook. Perhaps the PSC thinks that New York has become sufficiently "suppressive" that

Karkhanis Defends Against Professional Staff Congress's Attack on Academic Freedom

The latest issue of Sharad Karkhanis's Patriot Returns features a letter from Fred Brodzinski and Stephen Peter Russell alleging that the City University of New York's incompetent union, the Professional Staff Congress, may have violated union election procedures:

"It seems that the merry krew at Bowen's Broadway Bunker may have been tampering with pending elections for HEO alternate representatives to the Delegate Assembly. Rather than putting forward the names of candidates who took the trouble to attend a nominating meeting, the New Caucus seems simply to have made up their own slate. Another example of democracy, "Dear Leader" style, perhaps?"

Karkhanis writes an assuring letter to union President Bowen:

"Let me say that I am deeply, deeply sorry if there was any misunderstanding between us regarding my absolute and undying loyalty to the New Caucus Party and the Professional Staff Congress (not that I would ever imply of course that there should be ANY difference between the two)....And how can I NOT give monumental thanks to First Vice President Steve London, the modern day Prometheus of the American Labor movement, for his great gift of unwavering loyalty and dedication to the Party."

In response to Karkhanis's anti-Professional Staff Congress newsletter, the PSC leadership, via PSC lackey "Sue" O'Malley, has filed a law suit, O'Malley v. Karkhanis. Karkhanis notes that:

"The sum of $2,000,000 is being sought in monetary damages, as is a permanent injunction prohibiting Professor Karkhanis from "making, printing, publishing and distributing wrongful statements" regarding Professor O'Malley in the future."

"Karkhanis's supporters have set up a website, freespeechcuny,. According to the site,

"On Friday, November 9th, attorneys representing Sharad Karkhanis filed, on his behalf, a formal notice of appearance in the case, along with a demand for a complaint, in the Supreme Court of the State of New York, County of New York. This filing compels Susan O'Malley and her attorney to file her formal complaint, setting out in detail the factual basis for her claims, within 20 days."

The Free Speech CUNY website also defends Karkhanis's allegation that "Sue" O'Malley has supported terrorists:

"Lest anyone assume that Emeritus Professor Sharad Karkhanis has pulled his comments from thin air, the records of CUNY’s University Faculty Senate provide ample evidence to the contrary. At the April 5, 2005 plenary session of the UFS, chaired by Professor “Sue” O’Malley, the following resolution was passed:

"...We deplore the denial of due process for adjuncts in two recent cases, which in effect denies them academic freedom:

"We deplore the decision by the Central Administration of CUNY to remove Mohammed Yousry* in April 2002 from his post as an adjunct in Political Science at York College. Our disagreement with the Central Administration's decision in no way trivializes the federal charges against him, but addresses the Chancellery's refusal to initiate formal proceedings and to accord Mr. Yousry due process and the presumption of innocence until proven guilty and all legal processes are exhausted.

"We deplore the exclusion of Susan Rosenberg from any further teaching at John Jay College of Criminal Justice as a result of a decision in December 2004 by President Jeremy Travis in response to complaints by a police fraternal organization and without appropriate faculty consultation. President Travis offered no academic grounds for the exclusion, and his decision compromises the long-held academic tradition of faculty self-governance in selecting who shall teach and what shall be taught....

*On February 10, 2005 Yousry was indicted in the United States District Court, Southern District of New York, along with attorney Lynne Stewart and Ahmed Abdel Sattar, of conspiring to provide, and providing, material support to terrorism and conspiring to defraud the U.S. government, and was convicted. According to an article in The Nation, Yousry was originally scheduled to be sentenced in September 2006, but he was actually sentenced on Monday, October 16, 2006 to one year and eight months, as reported by CNN in an article that has disappeared from their archives, but which can still be read in the version cached by Google.

Sunday, November 11, 2007

Savings Accounts in Foreign Currency

Jim Rogers was on Bloomberg radio on Sunday morning at 6:25 am and he was talking about the dollar declines, Helicopter Ben's humming propellers and the Chinese stock market. Two of Rogers's ideas that caught my attention were investments in agricultural commodities and in the renminbi, the Chinese currency. Unfortunately, it is inconvenient for small investors to purchase Chinese currency because of the Chinese government's low-valuation strategy. However, where you can invest easily is in various currencies through Everbank. The minimum deposits range from $10,000 to $20,000 (for the indexes). Unfortunately, Everbank does not offer renminbi cds, but they do have 15 other cds including Hong Kong.

Powershares has commodity index products including a DB agriculture fund.

It is unfortunate that I cannot trust the dollar now, but given the irresponsible history of the Fed, I would rather keep my savings in another currency and/or secure it through commodities tracking investments.