Archive for the ‘Government’ Category.

Democratic Socialism

Not sure where this came from:

bernie sanders democratic socialism

Thomas Sowell writes:

What President Obama has been pushing for, and moving toward, is more insidious: government control of the economy, while leaving ownership in private hands. That way, politicians get to call the shots but, when their bright ideas lead to disaster, they can always blame those who own businesses in the private sector.

What President Obama has been pushing for, and moving toward, is more insidious: government control of the economy, while leaving ownership in private hands. That way, politicians get to call the shots but, when their bright ideas lead to disaster, they can always blame those who own businesses in the private sector.Politically, it is heads-I-win when things go right, and tails-you-lose when things go wrong. This is far preferable, from Obama's point of view, since it gives him a variety of scapegoats for all his failed policies, without having to use President Bush as a scapegoat all the time.

Back in the 1920s, however, when fascism was a new political development, it was widely -- and correctly -- regarded as being on the political left. ....Mussolini, the originator of fascism, was lionized by the left, both in Europe and in America, during the 1920s. Even Hitler, who adopted fascist ideas in the 1920s, was seen by some, including W.E.B. Du Bois, as a man of the left.

People get blinded (probably for good reason, given the heinousness) by Hitler's rounding people up in camps and can't really get beyond that in thinking about fascism.  Which is why I sometimes find it helpful to use the term "Mussolini-style fascism".   And the US Left, led by FDR, was very much in thrall with portions of Mussolini-style fascism, so much so that the National Industrial Recovery Act was a modelled on Mussolini's economic management of command and control by corporatist boards.   Here is one description:

The image of a strong leader taking direct charge of an economy during hard times fascinated observers abroad. Italy was one of the places that Franklin Roosevelt looked to for ideas in 1933. Roosevelt's National Recovery Act (NRA) attempted to cartelize the American economy just as Mussolini had cartelized Italy's. Under the NRA Roosevelt established industry-wide boards with the power to set and enforce prices, wages, and other terms of employment, production, and distribution for all companies in an industry. Through the Agricultural Adjustment Act the government exercised similar control over farmers. Interestingly, Mussolini viewed Roosevelt's New Deal as "boldly... interventionist in the field of economics." Hitler's nazism also shared many features with Italian fascism, including the syndicalist front. Nazism, too, featured complete government control of industry, agriculture, finance, and investment.

The NRA has to be in the top 10 best overturn decisions by the Supreme Court.  Thought experiment -- do you think you could buy a Honda, Toyota, Tesla, Nissan or Kia in the US today if GM and the UAW were running the automotive board?

Government Web Site Actually Closes Down After Business Hours

from my Twitter account:

When You Give Up On Allocating Resources via Markets and Prices, All That is Left is Interest Group Politics

One of the ugly facts about how we manage water is that by eschewing markets and prices to allocate scarce water, all that is left is command and control allocation to match supply and demand.  The uglier fact is that politicians like it that way.  A golf course that pays a higher market rate for water doesn't help a politician one bit.  A golf course that has to beg for water through a political process is a source of campaign donations for life.

In a free society without an intrusive government, it would not matter whether California almond growers were loved or hated.  If people did not like them, then they just wouldn't buy their product.  But in California, the government holds the power of life or death over businesses through a number of levers, not least of which is water.

Almonds have become the Left's] new bête noir. The nut is blamed for exacerbating the California drought, overtaxing honeybee colonies, starving salmon of river water, and price-gauging global consumers. Almonds may be loved by consumers, but almond growers, it seems, are increasingly despised in the media. In 2014, The Atlantic published a melodramatic essay, “The Dark Side of Almond Use”—with the ominous subtitle, “People are eating almonds in unprecedented amounts. Is that okay?” If no one much cared that California agriculture was in near depression for much of the latter twentieth century—and that almonds were hardly worth growing in the 1970s—they now worry that someone is netting $5,000 to $10,000 per acre on the nut.

It is almost too much to bear for a social or environmental activist that a corporate farm of 5,000 acres could in theory clear $30 million a year—without either exploiting poor workers or poisoning the environment, but in providing cool people with a healthy, hip, natural product. The kind of people who eat almond butter and drink almond milk, after all, are the kind of people who tend to endorse liberal causes.

As for almonds worsening the drought: The truth is that the nut uses about the same amount of water per acre as other irrigated California crops such as pasture, alfalfa, tree fruit, pistachios, cotton, or rice. In fact, almonds require a smaller percentage of yearly irrigation use than their percentage of California farmland calls for. Nonetheless, the growth of almond farming represents to many a greedy use of scarce collective resource.

Why You Shouldn't Give the Government Backdoor Keys to Your Encrption

The Federal government insisted that every luggage maker give the government a backdoor key to their luggage locks -- and the government promptly released the keys to the public so no ones' luggage is secure any more.

Politicians Love Building New Sh*t, They Hate Maintaining the Old Stuff

Quote of the day from Randal O'Toole on the closure of the entire Washington Metro yesterday for emergency safety inspections

The Washington Post’s architecture critic claims that the shutdown happened because “we decided to let our cities decay.” In fact, it’s because politicians decided that spending money on new construction projects, such as the Silverand Purple lines, would benefit their political careers more than spending it maintaining the existing system.

Before that, it’s because politicians decided to saddle Washington with an expensive, obsolete technology that the region can’t afford to maintain. Metro needs to spend $1.1 billion a year on maintenance to keep the system from deteriorating; it spent about a third of that in 2014, so it’s getting worse every year.

Duh, the Pizza Guy Doesn't Take a Third of My Income or Throw Me in Jail if He Finds Me Smoking Weed

Republicans & Democrats Applauded When Their Guy (Bush and Obama) Grabbed for More Presidential Power; Now, They Are Terrified to Give it to Trump

I had this argument the other day with my mother-in-law -- you can't allow a President more power just because he is "your guy" and you trust him.  No matter how well you think that person will use the power (and I trust no one), you are setting a precedent for the next guy whom you may very well not like.   I wrote this way back in 2005:

Technocratic idealists ALWAYS lose control of the game.  It may feel good at first when the trains start running on time, but the technocrats are soon swept away by the thugs, and the patina of idealism is swept away, and only fascism is left.  Interestingly, the technocrats always cry "our only mistake was letting those other guys take control".  No, the mistake was accepting the right to use force on another man.  Everything after that was inevitable.

For years I have asked liberals -- who have cheered President Obama's power grabs as righteous on the basis that "Congress won't don anything, so Obama has to" -- how comfortable they will we with a President Lindsey Graham using the same powers.

I was frequently dismissed, but not any more -- as folks on the Left begin to wake up and imagine President Trump using the same powers wielded by Obama.  To this end, the New York Times has a good article on Obama's drone war and the precedent set for the next President:

President Bush started the drone wars, but Mr. Obama vastly expanded them. Almost entirely on his watch, United States strikes have killed as many as 5,000 people, possibly 1,000 of them civilians. The president approved strikes in places far from combat zones. He authorized the C.I.A. to carry out “signature strikes” aimed at people whose identities the agency did not know but whose activities supposedly suggested militancy. He approved the deliberate killing of an American, Anwar al-Awlaki.

The president also oversaw an aggressive effort to control the public narrative about drone strikes. Even as senior officials selectively disclosed information to the news media, his administration resisted Freedom of Information Act lawsuits, arguing that national security would be harmed if the government confirmed drone strikes were taking place.

The administration also argued in court that federal judges lacked the authority to say whether drone strikes were lawful. It refused to release the evidence that it claimed made Mr. Awlaki a lawful target. In lieu of information, the administration offered assurances that the president and his aides were deeply moral people who agonized over authorizing lethal force.

That last line is perhaps the most dangerous single argument in all of democracy, that it is somehow OK to give an individual enormous extra-Constitutional powers because you trust that individual.  Only now, at the end, do they understand:

But as this election season has underscored, powers this far-reaching should not rest solely on the character of the president and his advisers. In a democracy, the ability to use lethal force must be subject to clear and narrow limits, and the public must be able to evaluate whether those limits are being respected.

When discussing Trump, I see a lot of writers referring to 20th century precedents of populist autocrats.  But if you want to be worried about American democracy, a better example is perhaps the Roman Republic.  The Republic was not killed by one man, even Julius Caesar.    The Republic fell through the slow accretion of autocratic precedents over nearly a hundred years, many of which were set by folks like Gracchus (who seems to have been a well-intentioned reformer) and Sula (who was a hero in Rome).

Revisiting the Financial Crisis

This video below is pretty good, though it addresses only one of the two major distortions created by government.  In addition to the incentives, even mandates, to issue risky mortgages discussed below, Basel II capital standards created really strong incentives for banks to prefer holding mortgage-backed securities.

Stupid BS Government Officials Get Away with Everywhere

I don't know if you have ever had to write a check or sent a form to a county assessor, clerk, treasurer or the like.  But the odds are that the forms you were working with did not tell you to send a check to "Loudon County Tax Assessor" but to something like "Mike Cambell, Loudon County Tax Assessor."  There is absolutely no reason the assessor's personal name has to be on the check, or on the forms, or on the letterhead, or on the envelope, or on the return address.  But it is.  Because this is a way that small-scale elected officials have found to get free advertising and name recognition in their next election at taxpayer expense.  It is an advantage they have structured as incumbents against any would-be challengers.

And it has real costs even beyond the artificial limiting of electoral competition.  When the current assessor loses office, or retires, or just gets hit by a bus, all the printed materials in the office have to be thrown away as they all had his or her name on them and are thus obsolete.  All new material has to be printed.   Someone has to go in and manually edit every single form.  The printer has to reset to make a new batch of return address envelopes and such.  The bank needs to be notified that checks to the deposit will be addressed to a different person.  It is crazy.

Thank God We Have Unionized Government Workers and Not Some Damn Private Company

The TSA, which apparently stands for Theater of Security Absurdity, apparently is completely useless:

According to a report based on an internal investigation, "red teams" with the Department of Homeland Security's Office of the Inspector General were able to get banned items through the screening process in 67 out of 70 tests it conducted across the nation.

The test results were first reported by ABC News, and government officials confirmed them to CNN. Mark Hatfield, acting deputy director, will take over for Melvin Carraway until a new acting administrator is appointed. It was not immediately clear Tuesday where Carraway would be reassigned.

Fortunately, the TSA has been successful in creating accountability-free sinecures with stupendous pension and benefit plans for thousands of people who apparently learned the security trade from Sargent Schultz.

Finally, The First Reason I Have Been Given to Vote Trump

Is It Dangerous to Be a Police Officer?

I have always thought so, and the danger of the job is a large reason why police get so many special privileges, from outsized pensions to minuscule accountability for people they shoot or kill.

But police are not among the top most dangerous professions -- they are not even in the top 10.  Being a taxi driver is more dangerous ( and in fact for 2015 the #1 cause of death on the job was traffic accidents).  We don't fetishize garbage collectors like we do police but they die on the job at twice the rate as do police.

In fact, the rate at which police are killed by gun violence is not substantially higher than for the average citizen.  In 2015 there were 39 firearms deaths of police (from the source above).  Given the way that firearms stats are reported broadly, these are probably not all killings by other people (some police likely are killed by accidental discharge, etc).  But assuming they are all gun killings, and assuming about 900,000 police (I get a broad range of estimates for this seemingly simple number) gives a rate of 4.3 per 100,000 per year, not much higher than the US gun homicide death number of 3.55 (you may have seen much higher numbers of gun death numbers -- over 2/3 of these are suicides).

Postscript:  The current media model is breaking the Internet.  I have seen the chart a ton of times on the most dangerous professions, so I searched for it.  Do it yourself.  The first 8 or 9 links all turn out to be the stupid new media format of requiring 10 clicks to get through a list.  I simply refuse to ever click on these things.  It is a horrible way to present information.  I suggest you boycott them as well.

Freaking Awesome Development in Pennsylvania

Megan McArdle on "Washington Issues"

I thought this was a pretty good observation:

Why then, do so many people know about the tax treatment of carried interest? Because it is the epitome of a Washington Issue. A Washington Issue is something that sounds terrible, has little meaningful impact on more than a handful of people, and most importantly, allows you to pretend that you are addressing a different, very difficult issue that would impact a large number of people if you actually tried to make meaningful change -- people who might get angry and do something rash, such as voting for your opponent.

The carried interest issue is thus a convenient way for Democrats making stump speeches to claim that they’re really going to do something about inequality and cronyism, and maybe fund some important new spending on hard-working American families. With the entrance of Jeb Bush and Donald Trump into the arena, it is also a way for Republicans to seem tough on rich special interests while simultaneously proposing tax plans that will help affluent Americans hold on to a lot more of their income and wealth.

As with most Washington Issues, my actual level of concern about carried-interest taxation hovers somewhere between “neighbor’s bathroom grout drama” and “Menudo reunion tour.” Nonetheless, I’m beginning to wish that Congress would get rid of it without demanding anything in return, just to force politicians to talk about something that actually matters.

My tax proposal, as a reminder:

1.  Eliminate all deductions in the individual income tax code

2.  Eliminate the corporate income tax.

3.  Tax capital gains and dividends as regular income.

4.  Eliminate the death tax as well as the write-up of asset values at death

Your Public Unions at Work, in One Chart

fires

From Mark Perry

If you have ever been at, say, a kids sporting event and had an ambulance or paramedics called for one of the kids, you likely also had a fire truck accompany the ambulance or paramedics.  Did you wonder why they needed a firetruck with a 6 man crew to handle a broken leg in an open field?   Its because most public firefighters unions have gotten local laws passed that require a fire engine to always accompany the paramedics.  Why?  No reason other than they are trying to make firefighters look busy so no one starts to question why we have so many sitting around doing nothing.

Union leaders and fire department chiefs have found new ways to justify their growing budgets and payrolls. In a February 2001 report, the Wall Street Journal noted that 90 percent of firehouse calls in Los Angeles, Chicago and certain other cities were to accompany ambulances to medical emergencies. “Elsewhere, to keep their employees busy, fire departments have expanded into neighborhood beautification, gang intervention, substitute-teaching and other downtime pursuits,” the newspaper added.

The Aristocracy of Huckterism

I was thinking about the crazy populist nuttiness of Donald Trump and the misguided focus of Black Lives Matter and the musty socialism of Bernie Sanders.  As I drive around Europe and see ruins of castles and palaces, it occurred to me that we had almost always been saddled with an aristocracy exercising power over us.  Sometimes they won that position through violence and military action, and sometimes by birth.

But it struck me that we have a new sort of aristocracy today:  the Aristocracy of Hucksterism.  These new aristocrats are just as wealthy and powerful as the old sort, but they have found a new way to gain power -- By suckering millions of people to simply hand it to them.   And when they inevitably fail, and make things worse for everyone, they additionally manage to convince people that they root cause of the failure is that they had not been given enough power.

Keynesians Have Shot Their Only Bolt -- How Will They Spend Their Way Through The Next Crisis?

Governments have spent so much, to so little effect, to try to stimulate the current economy, I wonder where they will find the resources to spend more the next time?  Because you can be sure that despite the fact that we are likely near the top of a weak cycle, no one is paying back what was spent in the last recession or proposing to reduce central bank balance sheets.

This is a couple of years old, but tells the story pretty well:

The financial crisis that began in late 2007, with its mix of liquidity crunch, decreased tax revenues, huge economic stimulus programs, recapitalizations of banks and so on and so forth, led to a dramatic increase in the public debt for most advanced economies. Public debt as a percent of GDP in OECD countries as a whole went from hovering around 70% throughout the 1990s to almost 110% in 2012. It is now projected to grow to 112.5% of GDP by 2014, possibly rising even higher in the following years. This trend is visible not only in countries with a history of debt problems - such as Japan, Italy, Belgium and Greece - but also in countries where it was relatively low before the crisis - such as the US, UK, France, Portugal and Ireland.

So over a third of the debt that has been built up in all of history by Western nations was added in just a few years from 2007-2012.  At the same time, the central banks of these countries were adding to their balance sheets like crazy, essentially printing money in addition to this deficit spending.  In the US, the Fed's balance sheet as a percent of GDP hovered around 6% until the second half of 2008.   That had tripled to over 18% in 2012 (source).  At the same time, European central bank assets grew from about 7% to over 16% of GDP.

James Taranto has a regular feature named after a reporter named Fox Butterfield.  The feature takes statements such as "Despite Mary getting a PhD in Peruvian gender studies from Harvard, she has struggled to find a job" and argues that the "despite" should be replaced by "because".

This is certainly true of the statement that "despite record stimulus and Fed balance sheet expansion, the economy has remained sluggish".  That "despite" should be "because of".  The government continues to distort the allocation of capital and wonders why investment is sluggish and tends towards bubbles in certain assets.  Japan has stimulated for 25 years to absurd levels of debt and has gotten 25 years of sluggishness in return.

All this reminds me of a story in one of my favorite business books, "Barbarians at the Gate."  Back in the day, tobacco companies had a practice of jamming inventory into the channel just ahead of the semi-annual price increase.   They called this "loading."  The channel liked it because they got cheap product to sell at the new higher prices.  The tobacco companies liked it because it boosted quarterly revenues at the end of the quarter.  But that boost only happens once.  To show growth the next quarter, one must load even more.  Over time, they were jamming huge amounts of inventory into the channel.  I have never been a smoker, but apparently freshness is an issue with cigarettes and they can go stale.  Eventually, the company was loading so much their sales started to drop because everyone was buying stale cigarettes.

In find this a powerful metaphor for government interventions in the economy today.

Postscript:  I will give another example.  In Arizona, we are on a July-June fiscal year.  Years ago, some government yahoo had the bright idea to close a budget hole by passing a law that all businesses had to pre-pay their estimate of sales taxes due in July a month earlier in June.  For that one glorious year, politicians had 13 months of revenue to spend rather than 12.

But to set things aright the next year, they would have to live with just 11 months of revenue.  No way they were going to do that!  So they did the pull-forward thing again to get a full 12 months.  And they have done it every year since.  It has become an institution.  All this costs a ton of money to process, as the state must essentially process a 13th return each year, presumably paying overtime and temp costs to do it.  All for the benefit of one year where they got the use of one month of revenue early, we have been stuck with higher state operating costs forever.

A Textbook Government Solution

Problem: Long waits at the DMV

Solution: Triple the size of the waiting room

God forbid anyone would rethink an incredibly dysfunctional process.

It's Not A Market Failure When People Avoid a Crappy Investment

Environmentalists often claim that people systematically under-invest in energy conservation, something they call a market failure.   This is why Obama and the Left put in a much heralded provision in the stimulus package that used Federal money to subsidize home energy conservation (new windows and insulation and such).

A new study in the NBER looks at the results.  This is the abstract:

Conventional wisdom suggests that energy efficiency (EE) policies are beneficial because they induce investments that pay for themselves and lead to emissions reductions. However, this belief is primarily based on projections from engineering models. This paper reports on the results of an experimental evaluation of the nation’s largest residential EE program conducted on a sample of more than 30,000 households. The findings suggest that the upfront investment costs are about twice the actual energy savings. Further, the model-projected savings are roughly 2.5 times the actual savings. While this might be attributed to the “rebound” effect – when demand for energy end uses increases as a result of greater efficiency – the paper fails to find evidence of significantly higher indoor temperatures at weatherized homes. Even when accounting for the broader societal benefits of energy efficiency investments, the costs still substantially outweigh the benefits; the average rate of return is approximately -9.5% annually.

The only failure here is the government diverting capital from productive uses into money-losing ventures like this one.

Government Is Spending Millions to Rush To the Front of the Parade

From Shawn Regan at PERC, via Arnold Kling

Last year, riding the buzz over dying bees, the Obama administration announced the creation of a pollinator-health task force to develop a “federal strategy” to promote honeybees and other pollinators. Last month the task force unveiled its long-awaited plan, the National Strategy to Promote the Health of Honey Bees and Other Pollinators. The plan aims to reduce honeybee-colony losses to “sustainable” levels and create 7 million acres of pollinator-friendly habitat. It also calls for more than $82 million in federal funding to address pollinator health.

But here’s something you probably haven’t heard: There are more honeybee colonies in the United States today than there were when colony collapse disorder began in 2006. In fact, according to data released in March by the Department of Agriculture, U.S. honeybee-colony numbers are now at a 20-year high. And those colonies are producing plenty of honey. U.S. honey production is also at a 10-year high.

The White House downplays these extensive markets for pollination services. The task force makes no mention of the remarkable resilience of beekeepers. Instead, we’re told the government will address the crisis with an “all hands on deck” approach, by planting pollinator-friendly landscaping, expanding public education and outreach, and supporting more research on bee disease and potential environmental stressors.

I am sure the government, once they have had some bureaucrats running around filing reports and plans for a few years will soon claim credit for the improvement.  My prediction:  This agency will still be here 50 years from now.  You can never kill these things once created.  This is only slightly less irritating than politicians who claim that they "created X million jobs" when in office, but only slightly.

Update:  Another very similar example:  transfats.

The Food and Drug Administration recently moved to eliminate trans fats from the American diet, and food activists and the public-health lobby are claiming a historic victory. Yet this is a rare case of the Obama Administration regulating from behind. Markets had as much to do with the fall of trans fats as government did with their rise.

The FDA’s first restrictions on the use of partially hydrogenated oils as a major source of trans fats in processed foods—think Crisco shortening—give food makers three years to phase out the substance. Evidence began to accumulate in the early 2000s that trans fats were connected to bad cholesterol and cardiovascular diseases. Shoppers and diners concerned about health risks soon started to revolt against the fried and baked goods and the fast-food fare where they were prevalent.

Lo and behold, the food industry responded by changing their recipes and eliminating the oils from some 86% of their products. Trans fat consumption plunged by 78% over a decade, according to the FDA’s estimates, and is now well below the two grams per day that the American Heart Association says is the safe upper limit. The rare survivors of this purge are niche foods like microwave popcorn, frozen pizza and chocolate sprinkles, where trans fats are useful for improving taste and texture.

Iron Law of Bureaucracy

Last week I wrote:

One can build a very good predictive model of government agency behavior if one assumes the main purpose of the agency is to maximize its budget and staff count.  Yes, many in the organization are there because they support the agency's public mission (e.g. protecting the environment at the EPA), but I can tell you from long experience that preservation of their staff and budget will almost always come ahead of their public mission if push comes to shove.

Despite being a Jerry Pournelle fan, I had never heard his Iron Law of Bureaucracy, but it certainly fits my observations

Iron Law of Bureaucracy

In any bureaucracy, the people devoted to the benefit of the bureaucracy itself always get in control and those dedicated to the goals the bureaucracy is supposed to accomplish have less and less influence, and sometimes are eliminated entirely.

Obama Thinks The Free Market Killed Neighborhood Diversity. In Fact, It Was the New Deal

Here is a very telling paragraph from the HUD's new proposed fair housing rule

Despite the existing obligation to AFFH, in too many communities, the Fair Housing Act has not had the impact it intended — housing choices continue to be constrained through housing discrimination, the operation of housing markets, investment choices by holders of capital, the history and geography of regions, and patterns of development and the built environment.

So, they list "discrimination" as a problem, but then look at the other four items they list as problems.  These can all be summarized as "the normal operation of free markets, property rights, and individual choice."

Oddly missing from this list of causes is what many historians consider to be the #1 cause of lack of neighborhood diversity and ghetto-ization:  The Federal Government and the New Deal.  New Deal rules essentially forced the concentration of blacks into just a few neighborhoods.   The biggest unmixing of races in New York can be seen between 1930 and 1950.   Blacks in Brooklyn went from fairly evenly mixed to concentrated in Bed-Stuy, all directly attributable to New Deal rules.   Basically, ever since then, we have just been living with the consequences.  Via NPR in an interview with Richard Rothstein

On how the New Deal's Public Works Administration led to the creation of segregated ghettos

Its policy was that public housing could be used only to house people of the same race as the neighborhood in which it was located, but, in fact, most of the public housing that was built in the early years was built in integrated neighborhoods, which they razed and then built segregated public housing in those neighborhoods. So public housing created racial segregation where none existed before. That was one of the chief policies.

On the Federal Housing Administration's overtly racist policies in the 1930s, '40s and '50s

The second policy, which was probably even more effective in segregating metropolitan areas, was the Federal Housing Administration, which financed mass production builders of subdivisions starting in the '30s and then going on to the '40s and '50s in which those mass production builders, places like Levittown [New York] for example, and Nassau County in New York and in every metropolitan area in the country, the Federal Housing Administration gave builders like Levitt concessionary loans through banks because they guaranteed loans at lower interest rates for banks that the developers could use to build these subdivisions on the condition that no homes in those subdivisions be sold to African-Americans.

Postscript:  Here is how the Ken Burns New York documentary series explained it, though the source page is no longer available:

Government policies began in the 1930s with the New Deal's Federal Mortgage and Loans Program. The government, along with banks and insurance programs, undertook a policy to lower the value of urban housing in order to create a market for the single-family residences they built outside the city.

The Home Owners' Loan Corporation, a federal government initiative established during the early years of the New Deal went into Brooklyn and mapped the population of all 66 neighborhoods in the Borough, block by block, noting on their maps the location of the residence of every black, Latino, Jewish, Italian, Irish, and Polish family they could find. Then they assigned ratings to each neighborhood based on its ethnic makeup. They distributed the demographic maps to banks and held the banks to a certain standard when loaning money for homes and rental. If the ratings went down, the value of housing property went down.

From the perspective of a white city dweller, nothing that you had done personally had altered the value of your home, and your neighborhood had not changed either. The decline in your property's value came simply because, unless the people who wanted to move to your neighborhood were black, the banks would no longer lend people the money needed to move there. And, because of this government initiative, the more black people moved into your neighborhood, the more the value of your property fell.

The Home Owners' Loan Corporation finished their work in the 1940s. In the 1930s when it started, black Brooklynites were the least physically segregated group in the borough. By 1950 they were the most segregated group; all were concentrated in the Bedford-Stuyvesant neighborhood, which became the largest black ghetto in the United States. After the Home Owners Loan Corp began working with local banks in Brooklyn, it worked with them in Manhattan, the Bronx, and Queens.

The state also got involved in redlining. (Initially, redlining literally meant the physical process of drawing on maps red lines through neighborhoods that were to be refused loans and insurance policies based on income or race. Redlining has come to mean, more generally, refusing to serve a particular neighborhood because of income or race.) State officials created their own map of Brooklyn. They too mapped out the city block by block. But this time they looked for only black and Latino individuals.

This site has some redlining maps, including one of Brooklyn, prepared by the Feds.  Remember, this is not some evil Conservative business CABAL, these are Roosevelt Democrats making these maps.  This site adds:

While the HOLC was a fairly short-lived New Deal agency, the influence of its security maps lived on in the Federal Housing Authority (FHA) and the GI Bill dispensing Veteran’s Administration (VA). Both of these government organizations, which set the standard that private lenders followed, refused to back bank mortgages that did not adhere to HOLC’s security maps. On the one hand FHA and VA backed loans were an enormous boon to those who qualified for them. Millions of Americans received mortgages that they otherwise would not have qualified for. But FHA-backed mortgages were not available to all. Racial minorities could not get loans for property improvements in their own neighborhoods—seen as credit risks—and were denied mortgages to purchase property in other areas for fear that their presence would extend the red line into a new community. Levittown, the poster-child of the new suburban America, only allowed whites to purchase homes. Thus HOLC policies and private developers increased home ownership and stability for white Americans while simultaneously creating and enforcing racial segregation.

The exclusionary structures of the postwar economy pushed African Americans and other minorities to protest. Over time the federal government attempted to rectify the racial segregation created, or at least facilitated, in part by its own policies. In 1948, the U.S. Supreme Court case Shelley v. Kraemer struck down explicitly racial neighborhood housing covenants, making it illegal to explicitly consider race when selling a house. It would be years, however, until housing acts passed in the 1960s could provide some federal muscle to complement grassroots attempts to ensure equal access.

 

Corporate Surveillance Is Not What I Fear

The Left seems to be wasting its legitimate outrage about surveillance on the wrong targets.

At a base minimum, people should be able to walk down a public street without fear that companies they’ve never heard of are tracking their every movement — and identifying them by name — using facial recognition technology,” the privacy advocates wrote in a joint statement....

People simply do not expect companies they’ve never heard of to secretly track them using this powerful technology. Despite all of this, industry associations have pushed for a world where companies can use facial recognition on you whenever they want — no matter what you say. This position is well outside the mainstream.”

Look, I am all for these folks campaigning for better privacy protections on businesses, but really, isn't this the wrong target.  Seriously, Target is tracking me in order to ... what?  Make me a targeted discount offers and rearrange their stores to better match my shopping habits?

Look, the government has guns and prisons.  They can take my money and my assets.  What the government can do to me makes the fear of being in Pepsi's marketing data base seem like a pure joke.

Every day I leave my house I have to pass this damn government surveillance cactus not a hundred yards from my home, tracking my face and license plate.

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There are at least two more of these in walking distance of my house.

I have news for you folks on the Left -- the government doesn't give a crap about your privacy, but is willing to beat on private corporations for a while (which really pose you zero harm) to divert you from the real threat, which is them.  And in the end, despite all their rhetoric, they will likely let private corporations do whatever they want as long as the government gets a backdoor into the data.

It is the latter that worries me the most.  I couldn't care less what Wal-Mart knows about my shopping habits.   But I do care that data they gather could be funneled into Uncle Sam's greedy hands.

Overwrought Language of the Day

Our Overwrought language award this week comes from Kevin Drum of Mother Jones, writing about Paul Ryan's budget plan.  Drum calls Ryan's budget a "Vision of a Dickensian Hellhole".  He quotes Jonathon Chait as saying, "Its enactment would amount to the most dramatic rollback of government since the New Deal."

All this for a budget that proposes to reduce government spending to about 19% of GDP, a level that we have not seen since the Dickensian Hellhole of ... the Bill Clinton Presidency.  During the New Deal, spending hovered around 10% of GDP.

This is the ratchet effect that big government lovers are so adept at employing.  Under President Obama (with a lot of help from George Bush and a Democratic Congress) spending has skyrocketed to an unprecedented-except-in-WWII level of over 25% of GDP.  But suddenly Drum and Chait and company want to define that level as the new baseline, below which any drop is now "Dickensian."  Which is another reason that we should never, ever create a new government spending program because once established they are impossible to eliminate, no matter how stupid and wasteful.

 

Question: Name An Activity The Government is Better At Than the Private Actors It Purports to Regulate

I am serious about this.  We saw in an earlier story that the government is trying to tighten regulations on private company cyber security practices at the same time its own network security practices have been shown to be a joke.  In finance, it can never balance a budget and uses accounting techniques that would get most companies thrown in jail.  It almost never fully funds its pensions.  Anything it does is generally done more expensively than would be the same task undertaken privately.  Its various sites are among the worst superfund environmental messes.   Almost all the current threats to water quality in rivers and oceans comes from municipal sewage plants.  The government's Philadelphia naval yard single-handedly accounts for a huge number of the worst asbestos exposure cases to date.

By what alchemy does such a failing organization suddenly become such a good regulator?

Update:  On the topic of cyber security competence or lack thereof, there is this:

In mid-May, the Federal Bureau of Investigations lost control over seized domains, including Megaupload.com, when the agency failed to renew a key domain name of its own. That domain, which hosted the name servers that redirected requests for seized sites to an FBI Web page, was purchased at auction—and then used to redirect traffic from Megaupload.com and other sites to a malicious site serving porn ads and malware. Weeks later, those sites are still in limbo because somehow, despite a law enforcement freeze on the domain name, the name servers associated with Megaupload.com and those other seized sites were changed to point at hosts associated with a domain registered in China.

Yep, that is the lead government agency tasked with investigating hacking and cyber security breaches.