2015 July 23 Thursday
High Min Wage To Help Bring Haute Cuisine To The Masses

University of California is going to require $15 per hour minimum wage for employees and contractors. New York State is going to probably phase in $15 per hour minimum wage for fast food workers.

This all bodes well for robotics companies. I love to see the cities (SF, LA, Seattle), states, companies, and even universities creating an economic environment that will simultaneously cut the demand for low skilled immigrant labor and also speed up the development of robots, autonomous vehicles, and automated ordering and payment systems. Great news. Progessives finally embrace policies that will make the world a better place - at least for those smart enough to still be employed.

But there is a problem with high minimum wage: It gets in the way of fully qualifying for welfare benefits. In Seattle some $15 per hour workers are asking for fewer hours from their bosses in order to keep welfare state benefits. Hey, that's bad. We need to require 50 hour work weeks for those making $15 per hour. Earn enough to cut welfare benefits even further.

I'm really excited by the prospects for totally automated fast food restaurants. In the long run they'll lower costs as robotics technology matures and prices fall. Plus, robots will be able to make a larger assortment of better tasting food. Robotic chefs will exceed the best human chefs in ability while working for a fraction of the cost and more rapidly to boot. Haute cuisine at your local strip mall. What's not to love?

By Randall Parker 2015 July 23 08:58 PM 
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Progressives Have Made The Past Into The West's Original Sin

Frank Furedi notices something important.

Once upon a time, the historical past was an object of veneration and glorification. A nation’s past was often represented as a heroic age, and public figures used to invoke the Good Old Days. But today, the past, national or otherwise, has come to serve a very different purpose. It is invariably presented as a story shaped by malevolence, oppression, exploitation and abuse. It forms a past that demands condemnation, a past of which we are meant to be ashamed. Such sentiments are not confined to a small number of sensation-seeking historians. Popular culture is now dominated by a sense of the past as the Bad Old Days.

How better to replace traditions, values, laws, and institutions than to demonize them as part of an evil past.

The heroic view of the past was much more inspiring for me as a kid. Edison, Ford, Lewis & Clark, George Washington, and a great many others made me think of myself as part of a great civilization and gave me something to live up to. That's not what progressives teach today.

By Randall Parker 2015 July 23 08:13 PM 
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2015 July 18 Saturday
Obama Doing Massive Data Collection For Disparate Impact Enforcement

See Paul Sperry's piece: Obama collecting personal data for a secret race database.

Given Obama's views you will not be surprised to learn that the purpose is to more aggressively pursue disparate impact cases. Never mind that disparate impact can hurt those who it is intended to help or that it makes society less meritocratic.

I see this report against a backdrop of decline in self employment and a lower rate of business formation and growth in average company size. If the US government undermines meritocratic hiring then that might give a push in the direction of more people working in smaller companies. But if the economies of scale are growing strongly for other reasons then less meritocratic hiring might just make companies less efficient. They might respond by doing more hiring abroad.

If disparate impact enforcement forces banks to lend more money at lower rates to groups that default more often we can expect higher borrowing costs and maybe a reduction in consumer credit. That might be a net benefit. I think our current levels of consumer debt are unhealthy and the people borrowing a lot are hurting their own prospects. We'd be better off if far fewer had credit cards.

What I wonder: will the tech elite that is now one of the most powerful forces in the Democratic Party get sufficiently incensed at the costs of disparate impact to politically revolt against the doctrine and seek to get courts to restrict its use? They'd need to first change the mix of people working as reporters and commentators to bring about a big shift in reporting on this issue. They could do it. Michael Bloomberg, Jeff Bezos, and other big money figures have control over big pieces of the press.

By Randall Parker 2015 July 18 07:22 PM 
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2015 July 15 Wednesday
Productivity 70% Higher In Germany Than Greece

No need to work long hours when you get a lot done per hour.

Last year, German employees worked fewer hours than all their peers in the OECD’s 34 member states, although productivity as measured by GDP per hour worked was some 70% higher in Germany than in Greece.

Why are they in the same currency union? Here's an argument that German finance minister Dr. Wolfgang Schäuble and his allies intend to boot out some Euro members and shrink the size of the Euro zone to a level that would allow a close federal union of the remaining members. That seems plausible. Why? Because Portugal and Italy both have sovereign debt over 130% of GDP and Barry Eichengreen points out that rarely do governments run sustained large enough budget surpluses to pay down debts that large.

Greece is already in an economic depression on par with the US Great Depression in depth and the new deal with the Eurogroup is going to push the Greek economy deeper into a recession inside this depression (they were flat for a while). Their debt is going to go up. They won't meet the financial goals they have to meet to continue getting bail-out rounds. Grexit is delayed, not avoided.

What's needed: development of software and printing presses that would let Greece, Italy, Portugal, and likely a few other Euro states to go back to their own currency very rapidly. Each of these ejections from the Euro will likely be chaotic. They ought to be organized and fast so that economies can restart and possible grow.

By Randall Parker 2015 July 15 04:28 PM 
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2015 July 14 Tuesday
Split In Democratic Party Between Old School And Tech Democrats

Very insightful article by Greg Ferenstein about the developing split between the highly affluent tech Democrats and the old school union-supporting Democrats.. The tech Democrats are winning a lengthening list of battles and the old school Dems are losers. On some subjects rich Silicon Valley company founders are more libertarian than the average libertarian and yet on other subjects they are more interventionist than the vast majority of Republicans.

So what do tech founders want? They have a unique mix of extreme beliefs in meritocracy, competition, collectivism, and novelty-seeking (Poll)

They have a much greater faith in the power of education than is warranted. They do not appreciate just how much less smart the vast majority of the public is compared to them.

The Republicans are willingly letting themselves get wiped out by immigration. So they are not going to matter much in the future. The tech Democrats are going to become the most powerful force in politics if they aren't already. In recent years all new billionaires have come out of tech. I think Wall Street's power is going to wane though not as severely as union power or Republican rural and suburban power.

I am curious to see how the tech Democrats try to handle rising unemployment in the lower cognitive strata as the problem finally becomes too big to ignore. Mind you, the problem of unemployed less bright folks has already gotten amazingly large without getting accurately described in the mainstream media. The unemployment rate is highly misleading and yet still gets all the attention. But at some point this problem has got to get some recognition. What will the tech Dems decide to do about it?

I'm more curious than worried. I'm not a member of the elites or the tiers right below them who advise and support them. The people who I would consider as my (shrinking) faction matter less and less every day and so do our potential allies. So I see myself increasingly as an outsider in someone else's country.

By Randall Parker 2015 July 14 10:18 PM 
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How Eurogroup Set Up Greece To Fail

This Yanis Varoufakis interview about his negotiations with the Eurogroup finance ministers is very eye-opening.

We felt, the government felt, that we couldn’t discontinue the process. Look, my suggestion from the beginning was this: This is a country that has run aground, that ran aground a long time ago. … Surely we need to reform this country – we are in agreement on this. Because time is of the essence, and because during negotiations the central bank was squeezing liquidity [on Greek banks] in order pressurise us, in order to succumb, my constant proposal to the Troika was very simple: let us agree on three or four important reforms that we agree upon, like the tax system, like VAT, and let’s implement them immediately. And you relax the restrictions on liqiuidity from the ECB. You want a comprehensive agreement – let’s carry on negotiating – and in the meantime let us introduce these reforms in parliament by agreement between us and you.

And they said “No, no, no, this has to be a comprehensive review. Nothing will be implemented if you dare introduce any legislation. It will be considered unilateral action inimical to the process of reaching an agreement.” And then of course a few months later they would leak to the media that we had not reformed the country and that we were wasting time! And so… [chuckles] we were set up, in a sense, in an important sense.

Varoufakis says for months the Eurogroup refused to propose a set of requirements and instead just kept rejecting whatever the Greeks proposed. I think Tsipras was naive about the sorts of people he was dealing with.

The socialists have screwed up Greece and made it more corrupt. On top of that the Euro zone lend it too much money (the money itself strengthening government over the private sector and government-to-government aid almost always does) and then the Germans and their allies used Greece as a tool to teach the rest of the southern Europeans a lesson. Sad tale.

I suspect the Greeks are going to be forced out of the Euro zone sooner or later. They'd be better getting out sooner so that they hit bottom sooner. The longer they wait the deeper the bottom will be.

By Randall Parker 2015 July 14 09:39 PM 
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2015 July 11 Saturday
Greeks Need To Give Up On Euro, Bring Back Drachma

Matt O'Brien of the WaPo Wonkblog has written the best summary I've seen so far about how deluded the Syriza Party's leaders were in thinking they had a strong negotiating hand with Germany and the EU over debts and bailout terms: How Greece went from victory to economy-destroying defeat. As O'Brien points out, Syriza has managed to incur most of the costs of leaving the Euro and most of the costs of staying in the Euro by making incredibly bad decisions. This all comes on top of Greece already being in an economic downturn worse than US Great Depression. Not a good time to have bad government decisions. The banking shut-down has caused Greeks to respond in fear the economic distortions have intensified.

Since the northern European countries did an excellent job of insulating their banks and economies from a Greek economic meltdown, massive default, and exit from the Euro zone the Greeks had an incredibly weak negotiating hand. The long

Now that the Greek people have voted όχι (No) to German demands for much more austerity the Germans and their allies in the EU just left Greece hanging with a cut-off of money from the European Central Bank, closed banks and rapidly crumbling economy. When it became clear the Euros weren't going to soften their position the Greek Parliament caved to European demands.

But this cave-in by the Greeks looks like it is coming too late. German finance minister Wolfgang Schäuble is lobbying for Grexit, supposedly as a 5 year temporary measure. A Finnish parliamentary coalition will bring down its government if Finland supports another bail-out. It does not matter whether the Germans are being fair. It does not matter (though it is very interesting) that the Germans and their allies are being very inconsistent about what they claim EU rules allow. Another op/ed by Yanis Varoufakis, former Greek finance minister (pushed out to placate the EU) will not help at all. Give up the Euro. Move past it.

The Greeks ought to rapidly start preparing to reestablish their own currency. They could use debit cards and a modified Euro printed by their own central bank to make the switch. The Greek economy is shrinking rapidly and there is no time to waste. It is hard for businesses to function and foreign businesses literally have to fly in money to pay their workers.

Move on. Don't look back. Get your own currency back.

By Randall Parker 2015 July 11 04:43 PM 
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2015 July 08 Wednesday
World's Middle Class Make $10 To $20 Per Day

Do you have the earnings power of the world's middle income people?

The world’s middle-income population – people living on $10-20 per day – nearly doubled, increasing by 385 million from 2001 to 2011.

China has been lifting tons of people up into the middle class.

China alone accounted for more than half the additions to the global middle-income population from 2001 to 2011, with 203 million. Countries in South America and in Eastern Europe added 50 million and 39 million to the global middle class, respectively. By contrast, Africa and much of Asia, including India, have lagged behind.

The world's low income populations are increasing faster than the middle income populations.

While the global middle-income population has grown from 2001 to 2011, the largest increase is in the world’s low-income population. The share of people classified as low income ($2-10 per day) increased from 50% of the world’s population in 2001 to 56% in 2011, and the low-income population increased from 2.7 billion to 3.4 billion.

The people labeled as lower income are not the poor. I hear some of you voicing skepticism. Look, someone making $4 per day is making twice as much as the poorest poor person. Those lucky lower income people are making over $2 per day. Some are making up to almost $10 per day. If they can find a way to make more than $10 per day then they'll enjoy that Ozzie and Harriet middle class existence. By contrast, if you can find a way to survive on less than $2 per day you can you get yourself classified as really poor. Anyone making more than $2 per day and believe you are poor? Come on, get over your not-poor self. Are you really luxuriating at $5 or, heck, why not $8 per day? Then you are in fat city.

By Randall Parker 2015 July 08 08:31 PM 
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2015 July 05 Sunday
EU Lacks Asabiyyah And This Does Not End Well

Charts at fivethirtyeight.com attempt to portray Greece as the extreme economic outlier of Europe. Extreme outlier, sure. But what's notable about those charts: Southern Europe in general is in trouble. In the Euro currency zone only Ireland (barely), France, and Germany have surpassed their Q1 2007 GDP (at least of the several listed countries). Italy is still declining, especially south Italy. Scott Sumner has taken a good look at Italy as the soft underbelly of Europe.. GDP 7% below peak with the south 15% below 2007.

I think Europe is being hit by the same "winner take all" changes in the economy which are happening in America. The most skilled and productive make far more. The most affluent are leaving less successful areas making those areas even more dysfunctional. But with Europe when the most skilled go north and abroad the less skilled are left in separate countries. Membership in the EU and Euro Zone are not absolute. There is no national bank deposit insurance agency. The differences between the peoples of the various European countries are greater as are their tendencies toward responsible or irresponsible voting and government policy making. Language is a big barrier, especially for the less intellectually able. So the same economic forces tear at the fabric that holds together Europe much more than those economic forces are tearing at the fabric that holds together America (so our crisis comes much later).

The rising debt as percentage of GDP in several Euro countries (France included) spell big trouble for the Euro zone. Ed West says the EU lacks asabiyya (in Wikipedia Asabiyyah), which Arab writer Ibn Khaldun described in the 14 century as social solidarity or the will to engage in collective action. Ibn Khaldun's term has become quite popular of late in certain intellectual circles of a less ideological bent. Commenter Lady Magdalene hits the nail on the head.

This is a very long-winded way of saying "there is no Euro Demos." There is also "no EU Demos."

The EU has not inspired a European Demos. All it has done is bound together 28 Nation States in a dictatorial treaty organisation. And 19 of those Nation States were foolish enough to sign away their Sovereignty in order to join a flawed currency union.

Immigration is draining Asabiyyah in Europe and the United States. This does not end well.

By Randall Parker 2015 July 05 08:42 PM 
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Puerto Rico Has Deep Rooted Problems Like Greece

As you may already be aware, America's colonial possession Puerto Rico is in a downward spiral toward sovereign debt default. The vicious cycle has growing debt as one of its causes.

"The economy is in a vicious cycle, where unsustainable public finances are feeding into uncertainty and low growth, which in turn is raising the fiscal deficit and the debt ratio," the report says.

But the growing debt is not the only cause or even main cause of the weak economic growth. Another cause (or two): Puerto Rico also has a horrible school system. Really, not just lower ability students.

But wait. There's more (and appropriately reported in Foreign Policy): Puerto Rico Has the Same Problem as Greece: Its People Don’t Want Reform. We can't help people who do not want to change. I've got enough personal experiences with this problem that I know this one well. Adoption of the US federal minimum wage is part of the problem:

The same thing is happening in Puerto Rico, except the controversy surrounds the issue of the minimum wage. It has the same pay floor as the rest of the United States — $7.25 per hour. But unlike the United States as a whole, where this amounts to about 28 percent of the $49,803 per capita income, the minimum wage in Puerto Rico amounts to about 77 percent of the per capita income of $23,840.

But the unemployed in Puerto Rico don't want to admit their labor isn't even worth $7 per hour. That labor is worth so little for multiple reasons and those reasons are going to grow worse with time. This can't be turned around. The Democrats are going to be tempted to increase colonial office aid to Puerto Rico. I say no. Set them free.

Obviously Puerto Rico needs its own currency, its own central bank, and sovereignty. They need all the powers of a sovereign state so they can at least tackle some of the root causes of their problems.

By Randall Parker 2015 July 05 08:21 PM 
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How To Quickly Start A Greek Currency

The Greeks voted a resounding no to giving into EU demands on austerity without debt reduction. The Greek banks are out of cash. Imagine living in such conditions. Greece needs its own central bank so it can prevent its banking system from collapsing. That means it needs its own currency. The claim is made that it takes 6 months to introduce a new currency. Balderdash. As someone points out in the Marginal Revolution comments, one could use the same printing presses as Greece now uses to print Euros and just slightly modify the currency label to say Greek Euro or something similar. The whole art work does not need to be unique.

Also, lots of payments could be made with debit cards and other electronic means. The amount of physical new currency cash would be reduced both by still existing Euro cash and by electronic payments.

So if Angela Merkel and company do not blink and offer Greece debt reduction the path to #Grexit seems most likely. Then the depths of the resulting downturn will be determined in part by how fast Greece can transition to its own currency.

One thing the Greek government will likely do while doing the transition to their own currency: stop all debt payments. The government might shaft some of their domestic suppliers who they owe money to by paying them in depreciated drachmas. This could cause some domestic bankruptcies and make the downturn deeper.

So glad I'm not there.

What matters in the long run: sovereign debt is rising in most Euro zone countries. Not yet at Greek levels. But the next world recession could push many European countries into a dangerous debt level zone pretty quickly. Greece is a small scale rehearsal for what Europe is going to hit in its next recession. Will more countries fall out of the Euro then with far more calamitous results?

By Randall Parker 2015 July 05 02:37 PM 
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2015 July 03 Friday
If I Was A Greek Voter

I would vote Yes on the referendum on the EU bail-out negotiations.

I argue this for 2 reasons. The first reason is that the northern Europeans are really ready to shaft you badly if you do not give in to their demands. The second reason is that some of their demands would work in the favor of many productive Greeks in the private sector because their demands would shrink the public sector.

What do we know about Greece? It has widespread tax evasion. People do not want to pay their taxes. Okay, lets treat that as a revealed preference. If people do not want to pay much in taxes then their government employees should get less in the way of retirement benefits from government. They should expect to work longer longer. Those who go to work for the government should expect to work until age 69.

Hey, Greek government workers, if you want a better deal then don't work for the Greek government. Your own populace doesn't want to pay you much. Live within your means or go to work in the private sector.

Why is that a reason to vote Yes on the referendum? Because Angela Merkel will make the Greek government change their laws to make people work longer. Only Angela Merkel has the power to do it. You can't expect Greek leaders to do it unless the pressure on them is enormous. That enormous pressure can only come from Germany. The Greeks are lucky that the Germans are willing to play this role. Otherwise they'd have precious little working against restraining their spendthrift government.

So I'm arguing that Greeks in the private sector should see forced government entitlements reform as a feature of this financial crisis. Make the best of this crisis and turn the full force of German fiscal rectitude on your government. Its your only option for putting Greece on a sustainable fiscal path.

Furthermore, pressure from Angela Merkel has got the Greek government talking about making it easy for businesses to deal with the government. That's got to be a plus if you are in the Greek private sector.

I do not mean to suggest that the northern Europeans are being fair. If they were being fair they won't have lent your government so much money years ago. The northern European banks and governments were enablers if your government's irresponsible ways from the time your country entered the Euro zone.

Suppose you emerge from this disaster still in the Euro zone. What does the future hold? Alas, you can't even count on the northern European banks to refrain in the future from lending your government money once it is in better fiscal shape in some future year. You would be better off in the long run if the German government decided to get the EU to ban European banks from lending your government money. Only then would you be protected from a repeat of all the irresponsible acts in Greece and elsewhere in the EU that led you to this tragic state.

So my advice is to vote Yes. Then if you are involved in a business spend your time learning about ways to work around the capital controls that are strangling your country and find ways to do business internationally in spite of the Greek government and other EU governments.

By Randall Parker 2015 July 03 10:19 PM 
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2015 July 02 Thursday
Northern European Responsibility For Greek Debts

Recognizing the obvious: I.M.F. Agrees With Athens That Greece Needs Debt Relief. A country with debt of 180+% of GDP with an aging population and an economy that has been in depression for 5 years can't grow its way out. Outside of Europe the IMF always expects lenders to take a hair cut when the debt is that high. But inside of Europe the IMF is dealing with Germany.

When lenders make really bad lending decisions they lose money. The lenders of northern Europe made really obviously bad lending decisions by lending to a country that joined the Euro currency already had high government debt. That's a government that should not have gotten still more money lent to it. Yet Greek government debt was already at 120% of GDP in 2001.

Greece should have been kept out of the Euro. Once in the Euro the German and other northern European banks shouldn't have lent it money. Once the financial crisis hit the Europeans propped up the Greeks by lending government money in order to protect northern European banks from big losses. So the Greeks went even deeper into debt but this time to governments. Now the northern European governments don't want to admit they've got to take big losses for their foolish decisions.

James Galbraith makes some pretty good points about the behavior of the rest of the European governments.

I say all this knowing that Greek politicians have been spendthrifts, that Greek retirement age eligibility is too low (though the average Greek man retires at age 63), that the Greek government needs to do more to introduce market forces into the Greek economy. But Greece is not the only problem here.

The northern Europeans even could have said "you must raise retirement ages, sell off these industries, and do these market-opening moves in exchange for debt relief". But pointedly they did not and they refuse to do so. Germany is in the wrong here.

By Randall Parker 2015 July 02 10:31 PM 
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Russians Not Enthused About Real Democracy

Summing up Russia in a nutshell: Russian sociologist: ‘Almost no one in Russia wanted real democracy with separation of powers’.

Consequently, it is possible to say that “Russians have received what the majority of them wanted.”

Sounds about right. Why weren't elements of the old regime rooted out to allow democrats to flourish? There was no stomach for lustration (cleansing to remove remnants of the old regime).

Fearful of witch hunts, “no one raised the question of lustration.”

Lustration is much more in vogue among America's elites. Anyone who isn't pure of progressive heart is in danger of a slip of the tongue and banishment.

Also see Putin Allies Aided Russian Mafia in Spain, Prosecutors Say.

At some point it is going to sink in to white Western liberals that their preferences make them a dwindling minority. How will they respond? I'm curious to find out when they start to fear lustration.

By Randall Parker 2015 July 02 03:06 PM 
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Because We Said So: Polygamous Marriage Not Next Logical Step

Cathy Young asserts Polygamy Is Not Next. Why? Marriage is a dyad.

the entire existing structure of modern marriage is designed for a dyad

Dyad, Shmyad. This dyado-normative argument does not hold up to rights-oriented scrutiny. Polygamy has been around for many centuries and is still legal and normal in some parts of the world. It is far older and still more widely accepted than single sex marriage.

What is the relevance of the claim that the existing structure is marriage is designed in Western countries? For members of the liberal project the need to change the design of a social structure has not been seen as a legitimate reason to deny rights to previously marginalized minorities. Au contraire. Radical uprooting and replacement of traditions has been the order of the day.

Of course some on the Left will call for legalization of polygamous marriage and group marriage. But what next becomes a cause to extend rights is not entirely about being consistent in one's principles. The biggest obstacle to the spread of polygamous marriage: The paucity of examples favorably portrayed in the media.

Will the media change their tune and start running pieces aimed at building empathy for polygamous men and women? Seems unlikely. The polygamists aren't living in NYC and SF. So the media writers aren't going to meet them. Plus, the polygamists aren't (to my knowledge) liberal Democrats involved in liberal circles. So I don't expect reporters and commentators are going to build relationships with polygamists.

What's the best thing the polygamists have going for them? Its getting harder to find causes for expanding rights. Fredrik deBoer thinks it is logically inconsistent to be for same sex marriage and yet opposed to polygamy. See his article It’s Time to Legalize Polygamy: Why group marriage is the next horizon of social liberalism.

Now, I could give you a pragmatic argument against polygamy (like leaving most males without a mate seems unhealthy for a society). But pragmatic considerations aren't considered as morally legitimate - unless of course the argument for rights is ignored when it convenient to do so.

I could also argue that marriage is not innately a right. It exists for the benefit of society as a whole in order to provide a supportive environment for genetic parents to raise their who they feel loyal to largely for reasons to genetic relatedness. But that sort of biological thinking is way beyond the Pale of modern liberal thought.

So will we see a significant movement to legalize polygamy? I do not see the votes for it. I also think that Ruth Bader Ginzburg, Sonia Satomayor, and Elena Kagan are not inclined to look favorably on a guy married to and effectively master of several women. So polygamy's prospects at the Supreme Court level seem dim at this point. But I could be wrong.

Do you expect to live to see legalized polygamy?

By Randall Parker 2015 July 02 02:44 PM 
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