How the Democratic Party Has Caused Upstate New Yorkers to Flee

Upstate New Yorkers flee in large numbers.  According  to Jeff Platsky of the Binghamton Press and Sun-Bulletin. (h/t Glenda McGee),  84 people leave Broome County each month, 39 leave Chemung County, and 29 leave Tioga County.   

Platsky observes that every single county along Route 17 from Orange County to Pennsylvania has declined in population over the past decade; moreover, in upstate New York overall, 42 of 50 counties lost population.  Route 17 runs along the state's southern rim, known as the Southern Tier, which borders Pennsylvania. 

The reason is simple: lack of jobs. Yet, the Democratic Party has prevented  fracking in the Marcellus basin, which would have created thousands of jobs.  Instead, the jobs went to Pennsylvania.  Meanwhile, New York has the worst income inequality in the country--and the highest electricity rates.

Much of the protest against fracking has been misguided. For instance, Youtube  carries several videos of people who are able to ignite their tap water. The video makers claim that the problem was caused by nearby fracking. 

I asked a colleague at Brooklyn College about the videos.  The colleague, Constantin Cranganu, is a geologist who has written books on fracking. He told me that the water was catching on fire before the fracking and that fracking cannot possibly cause this, in part because the fracking occurs at a depth of over a mile while the water well is 100 or 200 feet deep.  Thousands of tons of rock separate the well from the fracking drill. 

Yet, meshuggener Democrats show this video to each other and proclaim that they wear the mantle of the one settled science, courtesy of Youtube, Bill Maher, and Al Gore. 

Writing in Forbes in 2015, Jude Clemente notes that New York's natural gas consumption had risen by more than a third, to 60% of its entire energy generation, but the state cut its natural gas production in the interest of ideological purity. The anti-fracking proponents are rich Democrats who work in tax-subsidized businesses: academia, government, law, and health care.  They have no qualms about forcing blue collar laborers into permanent unemployment. 

The handful of upstate counties that have gained population in New York mostly have been the ones surrounding Albany, seat of New York's bloated state government, or college towns. 

Platsky notes that there have been plenty of bureaucratically inspired, state-subsidized development schemes, all of which have failed.  

The exit of manufacturers like IBM and GE in the 1980s has not been followed by the kind of innovation that occurs in a free market economy. New York's high tax rates and totalitarian regulatory regime have inhibited entrepreneurship.  Retirees have little incentive to stay because of the cold climate and high taxes. 

More College Does Not Beget More Economic Prosperity

In a recent Forbes column George Leef of the John William Pope Center for Higher Education Policy points out that, contrary to President Obama's claim, higher education does not improve economic performance.  The claim that it does improve the economy arises from an error: the belief that correlation implies causation.  Countries with more wealth have more college graduates because they can afford to send more students to college.  They are not more wealthy because they have more graduates, for college attendance is a consumption good.  My guess is that the number of automobiles per capita contributes more to national wealth than do college degrees.

The claim that education leads to wealth is based on human capital theory. Human capital theory goes back to Adam Smith''s 1776 Wealth of Nations and Alfred Marshall's 1890 Principles of Economics.  The economist most closely associated with the human capital theory is Gary Becker, who won the Nobel Prize in economics.

Labor economists contrast the human capital theory with  Michael Spence's signaling theory, to which Leef alludes in his article.  Spence also won a Nobel Prize in economics.  Signaling theory suggests that ability is correlated with education, so years of education signal underlying ability.  A difference between human capital theory and signaling theory is that the former suggests that the material learned in school is relevant to economic performance while signaling theory does not.  Completion of a course in abstract mathematics suggests a high level of underlying ability even if the graduate ends up working in an unrelated field.  If signaling theory is right, then a simple IQ test and completion of a US Marines or Navy Seals boot camp training will predict as much as a college degree, maybe more.

I prefer a third alternative:  institutionalist theory.  Institutionalist  thinking places weight on mimesis in the creation of cultural patterns that are often irrational.  College is popular because of imitation.  In his 1978 book Culture of Professionalism, Burton Bledenstein shows that the impulse toward professionalism was a crucial foundation of the Progressive movement and that Americans have had a preference for professional status over and above wealth, fame, and learning.  Education is a sign of professionalism, so it is desired as a consumer good.  Likewise, American firms have preferred college graduates because degrees imbue their managements with professional status.  There is no evidence that higher education has contributed to firms' economic success.  To the contrary, the rise in the number of college graduates in America after World War II paralleled the ascendance of Japanese industry and the decline of Detroit.  

In his important work on productivity differences around the world, William Lewis of the McKinsey consulting firm showed, in the early 1990s, that production workers in the third world could be made to be about as productive as American workers through improvement in the organization of work and workplace training.  Third world workers can produce economic results that equal those of high school and college graduates.  Producing them requires insight as to the organization of work.  This was achieved in postwar Japan through innovative thinking at Toyota.  More generally, the individuals most responsible for workplace innovation have been Frederick Winslow Taylor, who chose not to attend college, Henry Ford, who did not go to college, W Edwards Deming, who held a Ph.D. in physics but never got a job related to his degree, and Taiichi Ohno, the inventor of lean manufacturing and the Toyota production system.  Ohno held a degree from Nagoya Technical High School. An exception is Sam Walton, who held a BA from the University of Missouri.

The chief contributions of business schools to business practice have been through the human relations movement, job redesign, the marketing concept, the capital asset pricing model, and other financial theories.  These are minor contributions.  The human relations school, for example, has contributed to Japanese management practice, but it has been ignored in the US as the Marxist critic (and Brooklyn College dropout) Harry Braverman points out in his Labor and Monopoly Capital.  The finance field, which is the one to which academics have made the most contributions, has been a canker sore on the American economy, requiring a multitrillion dollar bailout and ongoing subsidization from the Federal Reserve Bank; it has produced little of value in return.  Without college education Henry Ford invented the assembly line; Taiichi Ohno reinvented it.

In After Virtue, a classic work on ethics, Alisdair MacIntyre claims that there are three fraudulent figures of the modern world:  the aesthete, the psychiatrist, and the manager.  There is a fourth: the business professor who claims to raise productivity but knows nothing about the substance of management.  I am not the first to make this claim:  Abraham Zaleznik, in his Managerial Mystique, argues that business schools have lost touch with the substance of business.  As a critique of business education, Zaleznik's point is right, but its implications go further.  If business schools do not teach students how to succeed in business, why do they exist?

During America's period of most innovative and rapid economic growth, from 1840 to 1920, only about five percent of Americans attended college.  There is no evidence that much of the innovation of that period, chronicled in David Ames Wells's 1889 Recent Economic Changes, came from people with college degrees.  During that period college degrees were associated with professional careers, notably law, although doctors and lawyers often lacked undergraduate degrees. College was mostly associated with careers in the clergy until the 20th century.  It wasn't until well into the Progressive era that the claim that college education had anything to do with business success gained traction.  By then, most of the innovation associated with the modern world had occurred; even television and radio had been invented, by Nikola Tesla, in the 19th century.   Tesla, incidentally, had thought of AC electricity before attending a technological college in Europe, and his professor discouraged his pursuit of the AC motor, which created the modern world.

Barack Obama has done much harm to the nation through his  ill-conceived health reform and common core.  His claims about higher education, as Leef points out, will contribute to American economic decline.

How to find a job in a High Unemployment World

Sharon Gitelle of Forbes has posed a question to the bloggers on the Forbes network and aims to discuss the results in a conference call with Carl Lavin, Forbes's managing editor. Forbes just covered a case, Prudential v. Giacobbe, on which I worked as an expert witness, so this is my second crossing of paths with Forbes today (the first was indirect but still, something of a coincidence).

Question:

Recently, the U.S. Bureau of Labor Statistics reported a jump in the unemployment rate to 10.2%.Some economists think we could be looking at 10.5% by early next year.

Given these grim forecasts, how do you counsel recent college graduates and others entering the job market for the first time in this employment climate? Is there any advice or strategies you find particularly useful?

I have taught in business schools since 1991, most recently as an adjunct in the Langone MBA program in the NYU Stern School of Business for the past 13 years and in Brooklyn College's Economics Department as a tenured associate professor for the past 11. During all of those years I have addressed this question in my managerial skills and organizational behavior courses. Indeed, I have done so since I first started teaching at Clarkson University located in New York's 23rd Congressional District.

There are three steps to finding a job. The first is to have clearly defined goals and a mission. The second is to learn first hand about your chosen profession through intensive informational interviewing. The third is to utilize all available avenues, to include direct mail, Website and help wanted ads, search firms, job fairs, college recruiting and personal contacts as well as informational interviewing.

In What Color Is Your Parachute? Richard N. Bolles outlines a useful goal setting and informational interviewing approach that may be limited for college grads and MBAs in that he does not detail the concept of cold call informational interviewing that can be quite valuable in major job markets like New York's and other large cities'.

The idea of cold call informational interviewing is to arrange an in-person meeting with an experienced manager or professional in the field that the student is considering. This is done by:

-writing a letter requesting an informational interview that makes clear that he or she is not seeking a job but rather information on specified topics such as emerging trends in the field or how to break into the field;

-in the letter, setting a time that the student will call to set up a meeting;

-calling at the set time

Most students realize that the rejection rate will be higher than the acceptance rate, something that writers, actors and others in competitive fields know, but something that is always difficult to accept. I point out to my classes that success only comes from rejection; that Babe Ruth led the American league in strikeouts as well as home runs; and that Sylvester Stallone was rejected 150 times when he was trying to market the manuscript for Rocky (I got the last statistic from an Anthony Robbins tape circa 1990).

Informational interviewing works because managers are often interested in advising young people interested in the field. The "invisible job market" whereby jobs are filled through contacts is only accessible through informational interviewing. And the information gained in the interviews will give job applicants a leg up over others who lack inside information about the field.

Handling of the informational interview can be taken to high levels of sophistication. A good sales person can probably land a job in the informational interview without asking for one (remember, the condition of informational interviewing is that the applicant is not seeking a job). In the good years of the late 1990s I had MBA students at NYU landing an offer in one informational interview. That is less likely to occur now unless the applicant has strong sales skills. But a sequence of 20-50 informational interviews will land a job.

At one point I went on about a dozen informational interviews myself. My rejection rate to get in the door was about 80%, acceptance 20%. I did not get any offers (I did it during one summer) but had I continued I do not doubt I would have. Compare the 20% interview acceptance rate with the 1-3% acceptance rate characteristic of mass-mailed job letters. Moreover, the interviews are more productive because they are learning and relationship-building experiences.

Prior to informational interviewing the student should have set a life goal and mission. This is extremely difficult for about 20 percent of students; easy for about 20 percent; and a matter of mild indifference to the rest. A student with a focused goal can gain expertise in the field and will be motivated to put up with failure that leads to success. Developing a mission about which the graduate is enthusiastic is of incalculable value in today's world, where ethical confusion (which is not the same as ethical ambiguity) reigns supreme.

An individual with a moral sense that their professional objective is a personal mission will be focused and highly motivated. Clear goals work in a range of ways, and this is one of them. Combine that with inside information gleaned from informational interviews and a willingness to turn over every stone, and the worst job market will not prove disappointing.

Forbes Covers Case on Which I Worked

Over the past couple of years, I have served as expert witness on a case, Prudential v. Giacobbe. Ultimately, the judge threw out my expert witness report essentially for my giving legal opinion while not being a lawyer, but the attorney reworked my arguments as a legal brief and we won.

Forbes has written up the case here. This was the first time my work has been thrown out by a court, but not the first time the other side has tried. Several years ago I spent an entire day in deposition in downtown Chicago defending against that argument.

It is, of course, not the first time a national magazine has written about a case on which I worked, because I also started working on In Re Tittle et al. v. Enron before it was settled. The Forbes article doesn't mention that while the initial arguments were based on common law, we shifted the discussion to ERISA. The Prudential life insurance plan was an ERISA plan, and so the rule of ERISA outweighed the common law arguments. It is difficult for trial lawyers to work with ERISA because it is a specialized field. Courts' rules tend to favor big business. I worked cheap for the plaintiff, as is my policy.

Forbes writes:

>With death knocking at your door, you realize some family members are more important to you than others, and decide to change your life insurance policy accordingly.

What could go wrong? Just ask the Giacobbe family of southern New Jersey. Inaccurate change-of-beneficiary forms Richard Giacobbe submitted to his life insurer two weeks before his March 2007 death left his wife battling his parents and brother over three-quarters of a million dollars worth of benefits.

Richard, an insurance agent at Prudential Insurance, had named his wife Linda as the beneficiary on his company-sponsored life insurance shortly before their 1986 marriage. In March 2006, he was diagnosed with terminal thyroid cancer. As his condition worsened, there were signs he was becoming estranged from Linda; eight months after he was diagnosed, he began living alone in a rented apartment not far from the couples' Toms River, N.J., home.

On March 6, 2007, Prudential received a change-of-beneficiary form from Richard naming new primary beneficiaries on his life insurance: his mother, Kathleen; father, Robert; and brother, also named Robert. On March 21, Richard received a letter back from Prudential informing him that his beneficiary change form could not be processed because it was missing his family members' Social Security numbers. Richard never sent back the corrected forms and died the following day.

It wasn't long before Linda was locked in a court fight with her dead husband's immediate blood relatives over who should get the $751,000. The key question in the case: whether the incomplete change-of-beneficiary form was proof that Richard truly intended to remove his wife from his life insurance policy in favor of his parents and brother.

Read the whole thing here.

Robert Lenzner and Judge Richard Posner Argue for International Socialism

I responded to a Forbes article by Robert Lenzner in which Lenzner quotes Judge Posner in arguing that subsidies to large, incompetently run Wall Street firms that produce no value are essential because otherwise benefits to Posner's employers, the University of Chicago and the federal court system, will slow to a trickle.

Posner has made a career arguing that the judicial system optimizes social welfare. In Posner's view, the United States is wealthy because of judges and academics, not because of the innovation of the free market. In his view, all that is needed to become wealthy is further government control and centralization.

The difference between Posner and Stalin is this: whereas Posner, like Trotsky, argues for international socialism, Stalin argued for socialism in one country.

My response to Lenser follows:

Judge Posner's theory that he is smarter than the dynamic of markets is in a long tradition of advocacy of centralized economic planning that goes back to the days of the Emperor Diocletian. Posner's ideas worked so well in the Soviet Union and Cuba that he aims to transplant them here. The difference is that in the Soviet Union the spoils of socialism went to armed thugs, whereas in the USA Posner aims to distribute them to donors to the University of Chicago and his clients in the federal court system.

Posner's ideas do not work. The court system has done nothing to make the economy more rational. Rather, it has redistributed wealth to the wealthy. Now, Posner aims to extend his failed utilitarian strategy by subsidizing incompetently run Wall Street firms which have been cancer in the lungs of the American economy for a century.

The idea that Bear Stearns needed help from me is like saying that my grandfather's pneumonia ought to have been encouraged by his physician.

If Wall Street created value it would not need subsidies. If it created value, we would not need to transfer massive amounts of wealth to it annually via the Federal Reserve Bank's monetary expansion. Wall Street steals from the productive sector of the economy and donates it to the unproductive, say universities and the court system.

In the 19th century the American economy was relatively decentralized, there was no Fed, the courts had less power, and the real hourly wage increased two percent per year. In the 20th century we have increasing power arrogated to a self-serving federal court system and Wall Street, and real wages are increasing 2% per 25 years.

Posner, Lensner and the rest of the "oh dear Wall Street needs a trillion dollars of your money or the sky will fall" corrupt nexus of mass media, courts and academia should move to Cuba, that benign island nation off the shore of Florida where Posner's ideas flourish.