2013 February 27 Wednesday
About Half Of College Freshmen Get Degree In 6 Years

Check out Catherine Rampell's NY Times Economix post "Only Half of First-Time College Students Graduate in 6 Years".

What percentage of the people who enroll as freshmen in college make more money 6 years later than if they hadn't attended college in the first place? How many actually got something useful out of the experience?

What would be most telling: What's the graduation rate as a function of IQ? Of course this question won't be asked in the NY Times. But its the key question. How many people who enroll in college lack the intellectual horsepower to study? How many have attention deficit and just can't concentrate for long enough? In a more realistic society these people would be detected and steered toward training they would be capable of handling. Instead our schools and elite discussions on education keep harping on the value of college and the need to get more people through college.

How much of the supposed income-enhancing effect of college is just a measure of higher IQ for those who are capable of making it through college?

What would be even more interesting: For a person at a given IQ level how mcuh does each major enhance their money earning prospects? So suppose you have an IQ of 135 and you study chemical engineering. Compared to someone who studies, say, English how much more do you make 10, 20, 30 years out of college?

By Randall Parker 2013 February 27 10:17 PM 
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Too Many Veterinarians And Big Vet School Debts

The vast majority of people going to veterinarian school are female. Suppose you meet one. She's cute, smart, caring. Does she make for good long term relationship material? Only if you are rich. Declining demand for vet services combined with rising costs of veterinary schools mean heavily debt-laden vets spend their money on debt service. The comments on this NY Times article include some hard-headed realists.

But starting salaries have sunk by about 13 percent during the same 10-year period, in inflation-adjusted terms, to $45,575 a year, according to the American Veterinary Medical Association.

...

Today, the ratio of debt to income for the average new vet is roughly double that of M.D.’s, according to Malcolm Getz, an economist at Vanderbilt University.

These young women should be retrained to be nurse practitioners who will see human patients.

The article is one big joke on the absurdity of higher education. Schools trying to make more money expand their classes. More suckers sign up for study, debt accumulation, and careers of low salaries. What a waste of smart minds.

Even worse, a US government program that allows students to walk away from some of their debts after 10 to 25 years reduces the pain from choosing low paying majors. We need more people who work in higher value jobs. We should stop subsidizing the study of veterinary, sociology, anthropology, arts, and countless other majors that are paths to downward mobility. The US government should stop luring people into dead end jobs and low pay.

Any degree program eligible for federal student loans and grants should be required to provide data comparing that degree's market value to other degrees at graduation and in later years. Debt service costs should be spellied out as a percentage of expected take-home income.

By Randall Parker 2013 February 27 09:40 PM 
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2013 February 26 Tuesday
Scottish Highlander Regiments Replaced By Sheep

Over at The Oil Drum "Heading Out" quotes from Michael Brander's book Scottish Highland Regiments on why the Duke of Sutherland could not find Scottish volunteers to fight in the Crimean War.

I am sorry for the response your Grace’s proposals are meeting here today, so near the spot where your maternal grand-mother, by giving some forty-eight hours notice, marshaled 1,500 men to pick out the 800 she required. But there is a cause for it, and a genuine cause, and, as your Grace demands to know it, I must tell you, as I see that none else is inclined in the assembly to do so. These lands are now devoted to rear dumb animals which your parents considered of far more value than men . . . . your parents, yourself and your Commissioners have desolated the glens and the straths of Sutherland where you should find hundreds, yea thousands of men to meet and respond to your call cheerfully had your parents kept faith with them. How could your Grace expect to find men where they are not?

How tragic. There's a lesson here.

Do you feel like our leaders have not kept faith with us?

By Randall Parker 2013 February 26 07:29 PM 
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2013 February 25 Monday
Singapore To Cut Use Of Low Skilled Foreign Labor

If only the American elites would see the wisdom of such a move.

Companies must pay higher levies for lower-skilled foreign employees over the next two years and cut the proportion of overseas workers in some industries, Finance Minister Tharman Shanmugaratnam said in his budget speech yesterday.

The Singaporean government wants to double the growth rate of labor productivity. Makes sense. More than anything productivity determines living standards. Bringing in millions of low productivity workers, as America has allowed, lowers living standards. Lower productivity workers make less money, pay less in taxes, and get more help from the government because, for example, they can't afford to pay for their own medical care. The result? The formerly great state of California is a shadow of its past glory. Liberal Democrats celebrate. Rational minds should be appalled.

Americans should turn away from college majors that cost more than they ever earn back. Americans should turn away from the idea that imported labor will solve any of our problems. More productive machines and better software will increase productivity. Low priced unskilled labor will only decrease the incentives for innovation and purchases of capital equipment.

By Randall Parker 2013 February 25 09:21 PM 
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Too Big To Fail: Subsidizes Big Banks $83 Billion Per Year

The US government effectively guarantees the big money center banks can not fail. This is done partly so that companies can transfer enormous sums thru these banks without fear they'll lose their cash when the banks fail. It is also done to prevent a huge domino effect where JPMorgan, Bank of America Corp., Citigroup etc would all fail in a massive panic if one of them went down. This US government promise lowers the cost of money of big banks as compared to what small banks pay. The Bloomberg editors oppose this subsidy. Click thru and read the whole thing.

Lately, economists have tried to pin down exactly how much the subsidy lowers big banks’ borrowing costs. In one relatively thorough effort, two researchers -- Kenichi Ueda of the International Monetary Fund and Beatrice Weder di Mauro of the University of Mainz -- put the number at about 0.8 percentage point. The discount applies to all their liabilities, including bonds and customer deposits.

This subsidy makes smaller banks less competitive even though many of the smaller banks are more efficient and do a better job of assessing loan risks.We get more bad loans and a less efficient economy.

Parasitism takes so many forms.

By Randall Parker 2013 February 25 08:55 PM 
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2013 February 24 Sunday
Argentina: Nothing Has Been Learned

The Argentine government of President Cristina Fernandez de Kirchner lies about its 26+% inflation rate by claiming it is 15 points lower. Plus, the Argentine government silences both government statisticians (e.g. by firing them) and private ones as well. The Economist succinctly and humorously captures their take on the Kirchner government deceit and violation of free speech with an article titled Don’t lie to me, Argentina

In an extraordinary abuse of power by a democratic government, independent economists have been forced to stop publishing their own estimates of inflation by fines and threats of prosecution. Misreported prices have cheated holders of inflation-linked bonds out of billions of dollars.

Fines and criminal charges for telling the truth. This makes Cristina flat out evil in my book.

The congressmen customarily release the monthly report, produced by anonymous economists, to shield the experts from prosecution by the government. President Cristina Kirchner has levied fines and criminal charges against a number of the economists, accusing them of releasing deceptive inflation reports.

Government prosecution of former government economist Graciela Bevacqua has failed. A small victory against the oppressive and evil Cristina.

Bevacqua was director of Argentina's Consumer Price Index (INDEC) at the National Statistics Institute in Buenos Aires until she was fired for refusing to go along with such deceptions. Worse, she was then fined 500,000 Pesos – around $125,000 – as were other independent economists and statisticians - and criminal prosecutions were begun against her and others.

Yes, the Argentine government is muzzling free speech so they can tell big lies. Certain commenters from Latin America (really guys, using a British last name doesn't deceive me) keep telling me how great are certain left-leaning Latin American governments for resisting heinous international capitalists and making great socialist progress. Ha! I'm not going to wear rose colored glasses when I look at Latin America any more than I will when I look at Washington DC and the financiers of Wall Street.

Argentina's government has not put hyperinflationary monetary policy behind it. Even worse, Cristina has frozen food prices and other prices for 60 days. Expect big shortages and even greater economic damage.

Combined with Argentina's heavy currency controls, imports are going to become even harder to obtain.

The Argentine government even lies about how much it has reduced sovereign debt.

Okay, who wants to defend the lying, repressive, and economically damaging government of Argentina?

By Randall Parker 2013 February 24 10:02 PM 
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92% Of Pakistanis Disapprove Of US Leadership

I feel like I have something in common with the Pakistanis. Someone tell Faruq.

WASHINGTON, D.C. -- With President Barack Obama's first term characterized by strained relations between Pakistan and the U.S., more than nine in 10 Pakistanis (92%) disapprove of U.S. leadership and 4% approve, the lowest approval rating Pakistanis have ever given.

That's not all I agree with the Pakistanis about. 55% of the Pakistanis believe greater interaction between Muslim and Western societies is more of a threat than benefit. Only 13% see it as more of a benefit. Hey, obviously we have incompatible value systems. They see it. I see it. So we can stay in the West and they can stay in Muslim lands and we can interact only at a distance, say in internet discussion forums. Think of the money we'd save on both foreign military adventures and also on national security agencies following around potentially dangerous immigrants.

Good fences make for good neighbors.

By Randall Parker 2013 February 24 08:13 PM 
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2013 February 23 Saturday
Do The Uninsured Pay More For Medical Treatment?

How much of the medical expense debt default of the uninsured is due to higher prices for those who pay cash?

Dozens of midpriced items were embedded with similarly aggressive markups, like $283.00 for a “CHEST, PA AND LAT 71020.” That’s a simple chest X-ray, for which MD Anderson is routinely paid $20.44 when it treats a patient on Medicare, the government health care program for the elderly.

Every time a nurse drew blood, a “ROUTINE VENIPUNCTURE” charge of $36.00 appeared, accompanied by charges of $23 to $78 for each of a dozen or more lab analyses performed on the blood sample. In all, the charges for blood and other lab tests done on Recchi amounted to more than $15,000. Had Recchi been old enough for Medicare, MD Anderson would have been paid a few hundred dollars for all those tests.

Granted, Medicare is paying less than private insurance companies. Basically, people paying thru private insurance are subsidizing Medicare (making the intergenerational wealth transfer to the old even bigger than it looks at first glance). But dental practice standard prices for something like a root canal are much higher than what they get paid by insurance companies. So I got to wondering do people pay more when they have no insurance for a hospital operation or other procedure.

The account above with really high prices might just be the result of a naive buyer. As a May 2012 LA Times article shows people who pay cash can sometimes get the cheapest prices of all if they know to ask.

A Long Beach hospital charged Jo Ann Snyder $6,707 for a CT scan of her abdomen and pelvis after colon surgery. But because she had health insurance with Blue Shield of California, her share was much less: $2,336.

Then Snyder tripped across one of the little-known secrets of healthcare: If she hadn't used her insurance, her bill would have been even lower, just $1,054.

Read the full article. Cash prices can be really really cheap. But in most cases you have to ask.

I think it depends on the circumstances though. If, say, you want to get a colonoscopy as a preventative measure and you have time to shop around and offer cash then you can get a cheaper deal. But patients offer a number of different stories on whether insurance prices or cash prices are cheaper. One makes a simple point:

Basically every provider that one actually selects had no problem with me sending a copy of the EOB and paying what it said I owed. Basically every provider that one doesn't select offered me a cash discount but wouldn't negotiate. The cash discounts were never as low as the EOB number.

Here are some tips about negotiating lower medical prices. Aside: Why did the site show me a Spanish language video for Vidal Sassoon shampoo for women? Does their ad targeting software think I'm a Spanish-speaking woman?

By Randall Parker 2013 February 23 11:21 AM 
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2013 February 21 Thursday
If You Think The World Economy Is Headed To Collapse

A person who could choose where to live in preparation for world economic collapse ought to consider Iceland as their refuge. Iceland has one of the lowest murder rates in the world. Plus, Iceland has such cheap geothermal electric power that aluminum smelters have relocated there and Iceland is thinking about exporting electric power Europe. So Iceland can keep the electric lights on after TSHTF.

Could Iceland grow a lot of its food in greenhouses in the winter? It has cheap electric power to provide the lighting. So what would the fruits and vegetables cost? How self sufficient could it become?

If you've got to stay in the United States then I'm thinking Idaho's lowest rate of unsolved murders puts it high up in social capital and capacity to maintain civilization under extreme conditions.

By Randall Parker 2013 February 21 09:53 PM 
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2013 February 20 Wednesday
How California Governments Rack Up Huge Debts

Capital appreciation bonds don't even have interest payments due for many years.

Since 2007, hundreds of school districts and community colleges across California have used capital appreciation bonds to raise nearly $7 billion for various construction projects, according to data from the state treasurer’s office. The bonds have allowed school districts that are short on cash to finance classroom renovations and new athletic facilities while delaying payment for years, or even decades.

Someone who owns a house in a California city who expects to own it for many years until retirement needs to know whether their local government is taking steps now that'll cut the value of their house 10 or 20 years from now. Local governments that go bankrupt depress housing prices and cut services.

Rampant financial irresponsibility is going to collide with limits to growth and cause much larger debt defaults than we've seen in the last 5 years.

By Randall Parker 2013 February 20 08:03 PM 
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2013 February 18 Monday
Alan Krueger Sees Benefit From Higher Minimum Wages

Alan Krueger, Obama's chairman of White House Council of Economic Advisers, did research back in the 1990s with David Card where they found evidence that a minimum wage has both positive and negative effects that cancel out with small increases. While some employers will want to hire fewer workers others will have an easier time filling open vacancies. These filled vacancies cancel out some or all of the effect of other employers hiring fewer workers.

Now the government comes along and says, "you have to raise the minimum wage." Well, this helps them to fill some of their vacancies. Now some employers might find that they no longer want to fill their vacancies when the minimum wage goes up, that's a conventional effect.

But others may find that they were reluctant to raise the wages before, but now the government required them to raise it, and they still want to fill those vacancies. I think that those effects all kind of cancel out.

When we have a moderate increase in the minimum wage, then the net effect on employment is pretty much a wash. Some employers see an increase in employment because they fill their vacancies, because they can reduce some inefficiencies and others will have a conventional effect of a reduction. The net effect is basically no change in overall employment.

Krueger argues for another benefit due to higher productivity. At higher wages employees are supposedly less likely to quit. So they build up more skills and become more productive.

In my view the merits of Krueger's views on minimum wages do not matter. Consider: if, on one hand, boosting minimum wages will raise productivity and living standards while having little impact on employment then it has got to be a good thing. We ought to try it. If, on the other hand, higher minimum wages will cut demand for unskilled labor then higher minimum wages will reduce the influx of illegal aliens. Again, benefit. Either way we get a benefit.

There's an even greater benefit from higher minimum wages in the long run: greater incentive to automate. Lots of restaurant automation robots in use and in development. We'll get faster roll-out of customer-facing food ordering panels. Why talk to the cashier when you can select what you want and then slide your own credit or debit card? I've ordered pizzas online and then walked to a nearby pizzeria to pick up my order. It was done by the time I got there.

While most people are aware of home robotic vacuum cleaners less well known are industrial strength robotic vacuum cleaners for offices. Higher minimum wages will accelerate the development and deployment of robots.

By Randall Parker 2013 February 18 06:50 PM 
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2013 February 17 Sunday
Young Liberal Big Government Dreams

A New York Times article about young liberals in a pocket of Montana liberalism is entitled Young, Liberal and Open to Big Government. They want the government to help them with education and health care. This merits a bit of discussion.

People who think big government could solve their problems need to understand that government has been big for decades, has generated lots of policies and spending programs aimed at their problems, and yet their problems still exist and, in many cases, are bigger than they used to be. At this point in time big government is already heavily committed with entitlements programs which have unsustainable spending trajectories. Other functions of government (e.g. research, infrastructure, defense) have shrunk as percentages of GDP as liberal entitlements have grown. The US government is running large unsustainable deficits. Tax increases can't be used to try to solve the problems of teenage Montanans because tax increases have to go toward the growing Hispanic lower class and toward senior retirement benefits.

The US government, like many other governments of Western countries, has far over-committed to entitlements for the old and the poor. These commitments can't all be honored. Liberals who want more from government need a time machine so they can go back to the 1960s when the US economy was growing rapidly, average age was much lower, and the welfare state was much smaller. Then they could have satisfied their desire to see education, health, and welfare programs grow. Today when they approach the Leviathan asking for help the economy has far less ability to generate per capita income growth, higher tax revenue, and more taxpayer-funded services.

Since government is resource-constrained liberals need to ask how else can their problems be solved? For example, why does higher education cost so much? Higher education tuition has gone up faster than inflation for decades. More traditional liberal policies will not solve that problem. Actually, liberal policies played a large role in creating the problem. Government loans and grants increase demand and enable universities to charge more. What's the solution? Automation. Coursera, Udacity, Western Governors University, and other online schools are the solution. Slash labor costs.

Then there's health care. The US government has helped drive up health care costs too by both tax and entitlements policies. Government has subsidized demand. Government has also helped restrict competition through credential requirements and expensive drug approval regulatory processes.

If Gail Tverberg and economist Tim Morgan are correct then even with higher tax rates big government will have no capacity to deliver on more liberal dreams and will have to slash what it currently does. A shrinking economy can't fund expansion of the Leviathan.

By Randall Parker 2013 February 17 07:44 PM 
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2013 February 14 Thursday
North Carolina Slashes Unemployment Benefits

North Carolina is slashing unemployments both by dollars per week and number of weeks.

It would cut the maximum weekly benefit to $350 from $535 and cap benefits at 12 to 20 weeks, depending on the unemployment rate, instead of the current 26 weeks.

This is the Republican approach to keeping out the lower class. North Carolina should combine this with higher sales tax, higher minimum wage, and elimination of their state income tax. In fact, the President of the North Carolina Senate is considering the elimination of their state income tax.

What's cool about that last article: Republican state legislatures are considering elimination of state income taxes while Democratic state legislatures are thinking about raising state income taxes. Now, if they combine these measures with opposites shifts in sales taxes they'll help reshuffle the American population in ways guaranteed to give people just what they deserve. The hard part: convincing the Republicans to raise minimum wage levels at the state level. That would really drive the lower classes into the caring arms of just the sorts of politicians who want them.

A really brave right-wing state would give all released felons a free ticket on an airplane or bus to a left-wing state.

Here is what else the Republican states should do: Automate education in order to free up college professors to move to states dominated by Democrats. The Republican legislatures could use a sales tax to fund their state universities to create very cheap online courses. The Republican states could share college course lectures and online testing software. Free those professors from the need to live under Republican rule. Great for everybody.

By Randall Parker 2013 February 14 07:52 PM 
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2013 February 13 Wednesday
The False Assumption Of Common Cultural Glue

Muslim Patrols are carving out Muslim areas in British cities where you better not act in un-Muslim ways (say wear a skirt rather than a total tent). Jane Kelly is leaving London because she says "I feel like a stranger where I live". From Norway Jens-Martin Eriksen and Frederik Stjernfelt say Multiculturalism has created separate societies within the same territory.

Last summer, the director of Norway’s Trondheim Museum of Art, Pontus Kyander, decided that the museum should no longer fly the Norwegian flag. He argued that a nation’s flag is no longer a collective symbol that unites all citizens. On the contrary, it was divisive—rallying only ethnic Norwegians and Christians, while excluding the country’s newer inhabitants, who often profess a different faith. Kyander suggested that other symbols must be found, which could unite people across religions, ethnicities, cultures, and nationalities.

What if no common cultural glue exists? Ask the fans of multiculturalism.

What if Kyander is right that no common cultural glue exists, not only in Norway, but also in other European countries—and they eventually break up into separate nations, no longer defined by territory, but by religious and moral values? In such split societies, the original populations would live with their customs and norms, separated from others—usually Muslim immigrants—who inhabit a world of their own. What symbol could incarnate the values that keep such distinct communities together? And what kind of community, if any, is left in a multiculturalist society that no longer shares culture, religion, nationality, or language?

In Sydney Australia A Muslim housing development is planned.

Birmingham England is no longer British. Read the comments at that page.

By Randall Parker 2013 February 13 09:05 PM 
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2013 February 12 Tuesday
Left Wing Scandinavia No Longer Left Wing?

Scandinavia, now a financial role model that France should follow away from financial disaster.

The idea of lean Nordic government will come as a shock both to French leftists who dream of socialist Scandinavia and to American conservatives who fear that Barack Obama is bent on “Swedenisation”. They are out of date. In the 1970s and 1980s the Nordics were indeed tax-and-spend countries. Sweden’s public spending reached 67% of GDP in 1993. Astrid Lindgren, the inventor of Pippi Longstocking, was forced to pay more than 100% of her income in taxes. But tax-and-spend did not work: Sweden fell from being the fourth-richest country in the world in 1970 to the 14th in 1993.

Since then the Nordics have changed course—mainly to the right. Government’s share of GDP in Sweden, which has dropped by around 18 percentage points, is lower than France’s and could soon be lower than Britain’s. Taxes have been cut: the corporate rate is 22%, far lower than America’s.

Multiculturalism and immigration are still ruining Scandinavia. Their form of feminism is plain nuts. But at least financially they have stepped back from utter folly only to moderate folly. They still are on a demographic road to disaster. But at least they've let the private sector be big enough to produce some stuff.

By Randall Parker 2013 February 12 08:57 PM 
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Obama Wants $9 Per Hour Minimum Wage: Not Far Enough

Barack is thinking in the right direction. This is the sort of measure that will cut unskilled immigration. So I applaud him. But he has set his sites too low. $15 per hour baby. Don't be shy. Think of the children.

By Randall Parker 2013 February 12 08:57 PM 
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Caribbean Market For Citizenship

Read this AP article on Caribbean islands that are selling citizenship.

Nation-less Palestinians buy citizenship to get passports so they can travel. Wow. Glad I'm not one of them. They have my sympathy.

Some people are buying a second passport in case of unfavorable political events. Can an American buy a second citizenship and retain their American citizenship? The insurance policy idea has some appeal.

On St. Kitts there's a condo project where as part of the price of the condo you get citizenship. Is that cool or what? Dominica (not to be confused with the Dominican Republic) sells citizenship for $100k per year. I think they should raise their prices and go for an upscale clientele.

My modest proposal: A billionaire should buy out the citizenships of the vast majority of the people on some island by offering them money and purchased citizenship on another island. Then with a fairly unpopulated island the billionaire should market te island as a totally upscale place for wealthy people who could use it as a tax and political haven. I think this approach makes a lot more sense than trying to create floating countries as Peter Thiel and Patri Freidman would like to do with Patri's seasteading proposal.

By Randall Parker 2013 February 12 06:36 PM 
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2013 February 10 Sunday
Downward Mobility For Generation Y In Job Market

The fading American dream.

Generation Y professionals entering the workforce are finding careers that once were gateways to high pay and upwardly mobile lives turning into detours and dead ends. Average incomes for individuals ages 25 to 34 have fallen 8 percent, double the adult population’s total drop, since the recession began in December 2007.

As I've laid out in many previous posts, I see compelling reasons why this is going to get worse. Rising natural resource extraction costs, decaying demographics, less low hanging fruit for doing innovation are a few of the reasons. You needto raise your game if you just want to stay at the station in life you've reached.

The law schools graduate almost twice as many lawyers as there are legal jobs. Do not go go law school unless you can get into one which has really high admissions criteria. The non-brilliant have bleak prospects in law. The prospects for architects are also bleak.

I've argued previously that the idea that immigrants have wiped out the value of STEM degrees is false. Here I will flesh out some evidence for this assertion. With or without immigrants the value of a degree in chemistry or biology is low. The number of academic jobs for Ph.D.s is far fewer than the number of Ph.D. holders in science. But the "E" in STEM offers many well-paying possibilities for anyone willing and able to pursue the right degree. Overall engineers in the United States are paid a lot more than the average.

Over 12,000 engineers from the U.S. responded to the online salary survey between April 1, 2011 and March 31, 2012, providing insights into salaries and job market. The survey data revealed that the average total annual income, including commissions and fees, for an engineer in the U.S. in 2012 was $103,497, nearly 4.0% higher than the $99,738 figure reported in the 2011 survey.

These are not upper class salary levels. But they are at least upper middle class salary levels. That's what you need in order to live what most people would rate as a middle class lifestyle. If you choose your field wisely you can go even higher.

The engineering jobs that offer the highest compensation are in ocean ($169,000), followed by cost management ($129,500), petroleum ($127,043), safety ($125,000), minerals and metals ($121,000), and fire protection ($116,000).

What's not revealed here are the advantages of being great at what you do. Top notch software developers can make a few hundred thousand dollars per year in the right firms in Silicon Valley.

You can cheaply start learning some skills that will raise your market value. It takes time and brains to do the learning. Most will not want to make the effort. But if you are willing and able to make the effort you can insulate yourself from huge developments that threaten to cause large declines in Western living standards. We've lost some major advantages and now live in the great stagnation. Adjust to this. Change your life to acknowledge what has changed.

By Randall Parker 2013 February 10 07:03 PM 
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Cultural Anthropology: Down An Intellectual Dark Hole

Razib Khan dismisses cultural anthropology for going beyond the event horizon of comprehension.

Many cultural anthropologists believe that they have deep normative disagreements with Jared Diamond. In reality I think the chasm isn’t quite that large. But the repeated blows ups with Diamond gets to the reality that cultural anthropology has gone down an intellectual black hole, beyond the event horizon of comprehension, never to recover. It has embraced deconstruction, critique, complexity (or more accurately anti-reductionism) and relativism to such a great extent that whereas in many disciplines social dynamics and political power struggles are an unfortunate consequence of academic life, in cultural anthropology the fixation with power dynamics and structures has resulted in its own self-cannibalization, and overwhelming preoccupation with such issues.

Cultural anthropology has been overrun by ideologues. When academia gets gutted by the shift to online learning some colleges will close. Others will shrink. Faculty layoffs from cultural anthropology departments will be one of the many benefits.

One of Diamond's critics, Barbara King, rates a pretty reasonable-sounding Diamond statement as nonsense.

In point of fact, I was startled at this passage on the jacket of The World Until Yesterday: "While the gulf that divides us from our primitive ancestors may seem unbridgably wide, we can glimpse most of our former lifestyle in those largely traditional societies that still exist or were recently in existence." This statement turns small-scale societies into living fossils, the human equivalent of ancient insects hardened in amber. That's nonsense, of course.

I'm looking forward to the massive restructuring of higher education. Check out Coursera, Udacity, Western Governors University, and more.

By Randall Parker 2013 February 10 04:38 PM 
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Mutual Funds Corrupt Stock Brokers

How much of the money earned by stock brokers is pure value transference with no value returned to the customer? It is not like stock brokers have any special skills for stock picking. Do not trust stock brokers trying to sell you on a mutual fund.

Toronto – Brokers are supposed to recommend investments that are in the best interests of their clients.

But a study published in the February 2013 issue of the Journal of Finance has found that mutual funds offering higher broker fees attract the most investments, especially when the broker is not affiliated with the mutual fund company. Every additional dollar paid to a broker corresponds with another six dollars invested into the fund, and another fourteen dollars if the broker is an unaffiliated third party whose compensation depends exclusively on sales commissions.

Half Sigma has written about the problem with value transference versus value creation. Some people make money both ways. Others only make money by creating new value. Still others are pure parasites and only get money from value transference.

The amount of value transference via entitlements programs is growing. What is less clear: is the amount of value transference in markets increasing? While Wall Street has a lot of value transference going on some forms of it have declined. So, for example, fewer people use full service brokers (i.e. brokers who try to convince you to buy stuff they'll make money off of). Also, more people invest in index funds that have lower management fees (i.e. value transference fees).

It might seem that value transference is increasing because for most people incomes have been stagnate or declining. The assumption is that incomes are stagnating because more money is being funneled off by value transference activities. But we should be so lucky. That might be a fixable problem. I see other causes of the great stagnation.

On the other hand, with worthwhile value creation activities harder to find value transference firms might be able to outbid value creation firms more often than was previously the case. What are some good metrics for trying study this?

By Randall Parker 2013 February 10 01:26 PM 
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Amazon Warehouse Work: Try To Avoid It

A Financial Times article about working conditions and pay in Amazon warehouses in Britain illustrates how far the manual laborers have fallen in status. On the bright side, they get several miles of walking exercise per day.

Inside the warehouse, Amazon employees wear blue badges and the workers supplied by the agencies wear green badges. In the most basic roles they perform the same tasks as each other for the same pay of £6.20 an hour or so (the minimum adult wage is £6.19), but the Amazon workers also receive a pension and shares. A former agency worker said the prospect of winning a blue badge, “like a carrot, was dangled constantly in front of us by management in return for meeting shift targets”.

If you work 40 hours per week in the warehouse you make about £240 per week. Contrast this with the pay at a former coal mine in Rugeley, a town which now has an Amazon warehouse.

By the time the pit closed, four days before Christmas in 1990, a spokesman for British Coal told Reuters it was losing £300,000 a week. More than 800 people lost jobs that paid the equivalent of between £380 and £900 a week in today’s money.

The robots are coming. In 10 years time I would be surprised if Amazon is still using half as many warehouse workers as it uses today.

Read the full article if you want to learn why you should accumulate more job skills. The bottom is a totally unfun place to be. Another reason to accumulate more skills: Western countries have debt-to-GDP ratios that make them financial basket cases. To get your skills up to a level that will let you avoid dead-end minimum wage work check out Coursera, Udacity, Western Governors University, and more.

The only thing I could see boosting the relative demand for manual laborers: a financial disaster due to declining Energy Return On Energy Invested. Such a disaster probably would not boost manual labor pay. But it would reduce the ratio of pay between highly skilled and unskilled laborers. We'd have humans doing a lot more of the work which today is done by machines.

By Randall Parker 2013 February 10 12:07 PM 
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2013 February 08 Friday
Harvard Degree Worth Less Than South Dakota School of Mines?

$56,700 beats $54,100.

Harvard University’s graduates are earning less than those from the South Dakota School of Mines & Technology after a decade-long commodity bull market created shortages of workers as well as minerals.

Employers need brains that can do specific kinds of work. They'll pay highly for the right skill sets.

Maybe the average Harvard grad's income goes up faster. But the average Harvard grad has a higher IQ. That will help the Harvard grad become more productive and make better career decisions, with or without a Harvard degree.

I suspect the percentage of high cognitive load jobs that require specialized training is rising. The Harvard grad with a degree in English can still fit into many management positions. But in high tech someone with an engineering or computer science degree can make as much money in the 1st or 2nd rung of the management ladder as someone makes in the 3rd or 4th rung in other less demanding industries. How much does a manager of a fast food place make? Not much. Ditto a bank branch manager.

By Randall Parker 2013 February 08 06:50 PM 
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2013 February 06 Wednesday
Sales Taxes And High Minimum Wages Are Anti-Decay

As I've previously argued: Raise Minimum Wage To Reduce Illegal Immigration. Here I build upon this argument. Over on Half Sigma's Lion Of The Blogosphere blog I made the point in comments that high sales taxes cut spending on local goods and services and therefore reduce migration of the lower skilled toward where the higher skilled live.

Want to create a very upper class city with low social pathology? Jack up minimum wages to $15 per hour (at least) and make sales taxes 15%. Next, institute a flat rate residence tax in place of a property tax.

Why this would make a city a better place: High earners would spend less locally and therefore their presence would serve as far less of a magnet for low earners.

  • Relatively speaking, mail order would be much cheaper. Local stores would be few and far between and so would their employees.
  • People would spend less on local repairs and opt instead to replace broken cars, appliances, etc.
  • There'd be so few jobs for the less skilled that they've move somewhere else. The city should expand its boundaries and build a big green zone around it so that cheap services do not move to just outsides city limits.

A determined city could pile on with even more measures:

  • Ban used car dealers and put an even higher tax on car repair.
  • Ban lawn mowing. Make people put in low maintenance lawns if you allow lawns at all.
  • Institute minimum bedroom sizes and 1 toilet per bedroom minimum.
  • Require all new roofs be 50 year roofs. The roofers won't keep coming back.
  • Make high end prefabricated construction the zoning preferred way to build. Less local labor for new housing.
  • Make it easy for businesses set up package pickup locations to decrease the risk of getting packages delivered while at work.

How else to cut the demand for low skilled labor in a metropolitan area? Got more ideas?

By Randall Parker 2013 February 06 07:36 PM 
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Violent Thieving Flash Mobs

Remember when flash mobs were something that SWPLs did to make an artistic statement? It doesn't seem that long ago. Now we have "teens" doing violent flash mobbing. Whatever will the liberals of New York City do about it?

I see New York City as the cutting edge place to try liberal techniques to control the populace without admitting the causes of underlying problems. I think realists should encourage liberals in the development of rationalizations as long as the results are effective. For example, Mandarin-English deep immersion charter schools to prepare your kids for the economic future of China the industrial titan. Great idea. Throw in English-German since Germany is such a big manufacturing powerhouse. Japanese would work too. Just avoid Spanish. Of course the underlying motive is not to carve out a public school where the cognitively less able will avoid sending their kids.

A key strategy: create environments which offer large quantities of cultural products and training that few outside the cognitive elite will find appealing. Imagine a grocery store where someone is always doing a live classical music performance. Too expensive? Just broadcast loud classical music in the store.

We really need more ideas on how to be pretend egalitarians with liberal beliefs while we create middle and upper class exclusive zones. Do you have some good ideas?

By Randall Parker 2013 February 06 07:30 PM 
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2013 February 05 Tuesday
Do Highly Skilled Immigrants Make STEM Majors Pointless?

Half Sigma thinks STEM degrees should be avoided due to foreign competition.

Americans are smart to avoid STEM in which they have no comparative advantage over the mass of immigrants and where they may be permanently fired after fifteen years because their skills are considered too old.

I do not buy this argument. Some points:

  • Most of the people who do poorly with a STEM degree studied "S", not "TEM". Science is fascinating to many smart people who try to make a go of it. They mostly end up poorly paid post docs and eventually unemployed. Industrial demand is not high enough to suck up even a majority of the bio and chem Ph.D.s into well paid jobs. This is the market's way of telling you to do something else. The automation of education will further cut into demand for science degrees.
  • Even within STEM's better paid "TEM" the market value of skills varies enormously from one field to the next. Petroleum engineers make way more than mechanical engineers who make more than civil engineers. Software developers used to be paid worse than electrical engineers. But that has reversed. Let the market guide your career choices.
  • People who study computer administration (more "T" than "E") are studying easier and lower paid subjects. The more motivated (e.g. to get lots of Cisco certs and develop lots of skills) and sharper among them can still get over $100k per year in some urban areas.
  • The value of "M" has risen for those who study the right kinds of math. Computer systems are collecting massive data sets. So the value of a statistics degree has risen. Statistics has a big overlap with machine learning and machine learning skills are similarly in rising demand.
  • Moderately intelligent computer programmers who complain about their job prospects are misleading. They suffer from the the Dunning Kruger Effect. They do not know how bad they are. You have to work with a lot of software developers and listen to the best of them talk about much weaker team members to know how extensive this problem is and to what extent the bad developers are oblivious to their poor performance.
  • As Turing Award winning computer scientist Richard Hamming pointed out, what you can accomplish depends on your rate of learning in your career. The best software developers accumulate skills with synergistic value. Those on shallower learning curves with less motivation and talent obscure what is happening with the market for the most talented.
  • If you cut STEM out the list of remaining jobs for smart people is much too short. There are too few slots in the top law schools and law is becoming more automated (and even outsourced) anyway. Medical schools have their slots full as well.

I know far too many affluent techies in the computer industry to think it is a bad place to be. Sure, there are industries where you can rise thru the ranks and make higher salaries as a manager without a STEM degree. A Harvard MBA has value. But how many people can get a prestige MBA? Not many. Plus, for many management positions a STEM degree is a gating factor to even get into the management pool.

The best STEM subjects offer better career prospects than all but a few occupations.

Update: Most of the best paid jobs right out of college are for engineering degrees.

By Randall Parker 2013 February 05 09:45 PM 
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2013 February 03 Sunday
Greek Heating Oil Too Expensive, Shift To Wood Burning

It is no wonder that an overwhelming majority of Greeks want to emigrate. Very high unemployment, cuts in wages, tax increases. A 450% heating oil tax hike in Greece has caused a massive shift to wood burning. Demand for heating oil has plummeted by more than half. Air quality is suffering.

At the same time, the smoke from the burning of wood — and often just about anything else that will catch fire — has caused spikes in air pollution that worry health officials. On some nights, the smog is clearly visible above Thessaloniki, Greece’s second-largest city, and in Athens, where particulate matter has been measured at three times the normal levels.

Fireplace wood is heavily polluting. Another consideration when deciding where to live when TSHTF. Colder areas will have worse winter air quality.

According to the EPA, a fireplace emits more than 2,000 times the amount of fine particles that an oil furnace does.

With the Greek unemployment rate at 26% the country serves as a glimpse into the future when the United States has its next financial panic.

Some people live in buildings that are not meant to house humans.

Mr Vrahasotakis, who is not entitled to state benefits, lives with his wife and 18-month-old daughter in an old building that used to be a canteen.

"In the winter it is freezing and a few months ago part of the ceiling caved in," he says.

The Greeks who can get a job work long hours.

In terms of employment, some 60% of people aged 15 to 64 in Greece have a paid job, below the OECD employment average of 66%. Some 71% of men are in paid work, compared with 48% of women, suggesting that women encounter difficulties in balancing family and career. People in Greece work 2109 hours a year, more than most people in the OECD who work 1749 hours on average.

Better to work long hours than to work sporadically.

The Greek government has also raised income taxes.

It also increased top income tax rate to 42 per cent from 40 per cent for Greeks earning more than US$56,000 a year, which is the higher-end of middle class average in Greece.

While there is outrage in Greece about rich people who avoid taxes my guess is the rich will leave rather than be forced to pay high taxes. They'll move their main offices to other countries.

What's weird about Greece's crisis: several other European countries have higher debt-to-GDP ratios. Note in that chart that those countries are not managing to deleverage.

By Randall Parker 2013 February 03 09:07 PM 
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Drug War Cheap Compared To MidEast Wars

Our total cost for the Iraq war is in the trillions of dollars. Afghanistan is in the hundreds of billions (and pretty well wasted beyond the initial invasion). By contrast, drug war in Central America is cheap. It could be more cost effective for armchair warriors to get their kicks watching battle scenes from Colombia and Central America. We just need reality TV shows where cameramen follow around government forces as they battle drug lords.

A new report from the Government Accountability Office provides a rare glimpse into the Central American war on drugs. Between 2008 and 2011, the report finds, the government spent $97 million for gear and training for its Central American partners. On the plus side, it’s laughably low compared to the more than $640 billion (and rising) the U.S. has spent on the war in Afghanistan.

Latin American reality TV with English language commentators explaining it all. Interview soldiers and drug traffickers in silhouette as they explain how they intend to kill each other. Guatemala, El Salvador, Honduras, Mexico, and Colombia can provide plenty of characters: government ministers, innocent kids playing near jungle air fields, soldiers at jungle roadblocks.

By Randall Parker 2013 February 03 07:50 PM 
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Late Career Workers Hit Hardest By Declining Industries

Catherine Rampell, an economics writer at the New York Times who consistently comes up with good topics, reports on big drops in earnings power by those in their 50s and 60s since the last recession.

These Americans in their 50s and early 60s — those near retirement age who do not yet have access to Medicare and Social Security — have lost the most earnings power of any age group, with their household incomes 10 percent below what they made when the recovery began three years ago, according to Sentier Research, a data analysis company.

Rampell's key observation: older folks are concentrated in older (and shrinking) industries. Are you working in an older industry? Do not wait until the axe falls. Continuously retrain and look for better opportunities. Even service jobs are getting automated.

The robots are coming. Many occupations will get automated out of existence. Robots are taking over middle class jobs.

With each month, the US economy becomes steadily more automated. In January the US economy added just 4,000 manufacturing jobs, and the net increase since July is zero. Yet last month, manufacturing activity rose by its fastest rate since April, according to the Institute for Supply Management. The difference boils down to robots, which pose an increasingly nagging paradox: the more there are, the better for overall growth (since they boost productivity); yet the worse things become for the middle class. US median income has fallen in each of the last five years.

Hear my call: Complacency is your enemy. Have you done anything in the last few years to better prepare and buffer yourself from the macroeconomic trends of outsourcing, automation, rising sovereign debt levels, immigration, and declining median income? Seriously, do you just complain about the government and prophesize doom? Or are you taking action for yourself? If the latter, what are you doing?

If you are not doing anything is this due to a feeling of helplessness, laziness, or a feeling of immunity from macroeconomic trends?

By Randall Parker 2013 February 03 06:09 PM 
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NY Times Bias On School Performance

Charter schools dilute the power of higher level managers of big school systems who have more credentials. Charter schools increase the power of parents. Naturally, the Gray Lady can't be enthused. Most charter schools do not accomplish much? Could be. But their performance isn't being properly measured.

That is the clear message of continuing analysis from the Center for Research on Education Outcomes at Stanford University, which tracks student performance in 25 states. In 2009, its large-scale study showed that only 17 percent of charter schools provided a better education than traditional schools, and 37 percent actually offered children a worse education.

A study released this week by the center suggests that the standards used by the charter authorizers to judge school performance are terribly weak.

What the NY Times wont say: Politically correct liberal measures of school performance are inherently weak. Why? They do not control for innate ability of students. The editorial board isn't about propose what would be the most accurate way to measure school performance: give all the kids an IQ test. Then measure the ability of a school to teach kids at each IQ level as compared to other schools that have kids at the same IQ level.

Mainstream liberal discussions of school performance will remain intellectually and morally bankrupt until they start taking into account innate abilities of students. If a school has a bunch of 120+ IQ kids then incompetent teachers can produce great results. If the school has a bunch of 90- IQ kids (and plenty do) then the most gifted teachers will fail to teach much and their teaching skills will be wasted. But we are a long way away from a society where a mainstream media outlet will state the obvious.

What I'd like to know about charter schools: Do they have lower levels of violence and other nearby non-charter public schools? Do they attract parents with better behaved kids?

We are so far away from a reasonable intellectual framework for thinking about child development and schools. The title of a press release from Lund University in Sweden highlights the ridiculous intellectual framework used when looking for reasons why some students do better than others in school: School system favors pupils driven by worry and conscientiousness. Conscientious students get higher grades. Anyone surprised by this? Even if the teachers favor the conscientious aren't those kids learning more because they study more? The body of the press release is more reasonable than its title. Worth a read.

By Randall Parker 2013 February 03 05:44 PM 
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2013 February 02 Saturday
Traditional Household Work Division Linked To More Sex

Guys, don't do girls work around the house if you want to get laid.

Married men and women who divide household chores in traditional ways report having more sex than couples who share so-called men's and women's work, according to a new study co-authored by sociologists at the University of Washington.

Other studies have found that husbands got more sex if they did more housework, implying that sex was in exchange for housework. But those studies did not factor in what types of chores the husbands were doing.

Of course, this study doesn't prove cause and effect. It could be that the guys who are willing to do cooking and cleaning are less sexy for other reasons. They might be less masculine-looking and sounding.

The new study, published in the February issue of the journal American Sociological Review, shows that sex isn't a bargaining chip. Instead, sex is linked to what types of chores each spouse completes.

Couples who follow traditional gender roles around the house – wives doing the cooking, cleaning and shopping; men doing yard work, paying bills and auto maintenance – reported greater sexual frequency.

If sociologists ever start controlling for biological differences their work would become much more interesting and useful. For example, in this study if they had measured digit ratios between index and ring fingers they would have gotten a decent proxy for masculinity and femininity. Ditto if they'd measured voice pitch.

By Randall Parker 2013 February 02 10:50 PM 
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Adapting To Unfavorable Societal Trends

The various unfavorable trends in America and other Western societies lead me to ask how to adapt? I want to start fleshing out a decision tree. Some questions that need asking:

Where can you own sufficient means to defend yourself? For example, in California you can't buy a pistol that holds more than 10 bullets. Are any other American jurisdictions worse? In which jurisdictions is it hardest to buy a gun?

Where and when can you use sufficient means to defend yourself? Some jurisdictions basically make it legal to kill someone who breaks into your home. Well, which jurisdictions do not recognize this basic right to self defense?

Suppose you want (in some cases really need) to keep your kids out of public schools and do home schooling. Which jurisdictions disallow this or put such high hurdles in place that they might just as well disallow it?

Can you operate your own business as a way to escape from the rules imposed within and on large businesses?

Does your career tie yo to a location because it is one of the few locations where that occupation is done to a substantial extent? Which career paths are best for breaking free of geographic locations?

What other laws and customs vary by jurisdiction and region that will make it harder to carve out a larger and safer private life buffered from what our society is becoming?

The United States is not the only place where people need to ask these questions. Look at Britain, where in some communities the British have become the strangers and outsiders. Our elites are certainly quite willing to do this to us. Many Western governments have stronger loyalties to ideologies, financial interests, and really bad ideas. Loyalties to their citizens? Not so much. I am amazed at how much this has changed in my life.

Update: While top athletes have flexibility to move to states with lower tax rates this is not an option open to most of us. Plus, since the pressure is going to stay on to raise federal rates what's really needed is escape on an international level. If you can run a company in a country with very low corporate tax rates you could accumulate a lot of money in that corporation. But short of that it is hard for a highly productive US citizen to escape the growing hunger of the Leviathan for money.

Self employment in a business not tied to geographical location offers the best prospect to escape a government that shows signs it will become much more dysfunctional.

By Randall Parker 2013 February 02 01:51 PM 
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