Why the Estate Tax Helps Our Competitiveness

Mr. Mallaby in today's Post didn't intend to endorse the estate tax in his column lauding American superiority over Europe in productivity, but I think he did in this excerpt:

Why U.S. Business Is Winning:

"The next explanation for American superiority is a healthy indifference to first sons. Bloom and Van Reenen report that the practice of handing a family firm down from father to oldest son is five times more common in France and Britain than in the United States. Not surprisingly, this anti-meritocratic practice does not always produce good managers. So even though the best European companies are managed roughly as well as the best American ones, there's a fat tail of second-rate firms in Europe that's absent in the United States."

As for the overall column, I'd apply a large grain of salt. Over the last 55 years I remember the many enthusiasms the chattering class had for the superiority of this system or that. As far as I can tell no one system maintained an edge for the whole time. That suggests to me that the factors that seem to make for greater productivity ebb and flow. It's like saying the CAA is better than the Big East in basketball based on this year's NCAA tournament.

Those Ivied Walls Are Falling Down; Meritocracy and Institutional Imperatives

An interesting op-ed in today's Times: To All the Girls I've Rejected,
by Jennifer Delahunty Britz, director of admissions at Kenyon College:

"The elephant that looms large in the middle of the room is the importance of gender balance. Should it trump the qualifications of talented young female applicants? At those colleges that have reached what the experts call a 'tipping point,' where 60 percent or more of their enrolled students are female, you'll hear a hint of desperation in the voices of admissions officers.

Beyond the availability of dance partners for the winter formal, gender balance matters in ways both large and small on a residential college campus. Once you become decidedly female in enrollment, fewer males and, as it turns out, fewer females find your campus attractive."

Link this to the thesis of The Chosen, by Jerome Karabel, a good book, recently published, which reviews the history of admission policy at Harvard, Yale and Princeton from 1920 to now. He traces the different criteria for admission used and not used: academic promise, SAT scores, personality, extra curricular, legacy (descendant of alumni), athletic ability, race, religion, geographic diversity, international diversity, etc. Sometimes "diversity" was used to keep Jews out, sometimes to get African-Americans in; "legacy" has always been important because it ties directly to alumni support (giving).

Karabel barely touches on the new controversy--whether affirmative action should apply to males over females. Twill be interesting--will Bill Buckley be happy if Yale is 80 percent female? Will the stalwart proponents of merit-based admissions change their positions when the issue is not black versus white but male versus female?

FEMA and Multiple Layers of Contractors

The Washington Post had an article, Multiple Layers Of Contractors Drive Up Cost of Katrina Cleanup on the 19th:

"Four large companies won Army Corps contracts to cover damaged roofs with blue plastic tarp, under a program known as 'Operation Blue Roof.' The rate paid to the prime contractors ranged from $1.50 to $1.75 per square foot of tarp installed, documents show.

The prime contractors' rate is nearly as much as local roofers charge to install a roof of asphalt shingles, according to two roofing executives who requested anonymity because they feared losing their contracts. Meanwhile, at the bottom of the contractor heap, four to five rungs lower, some crews are being paid less than 10 cents per square foot, the officials said."

A bunch of bloggers were attracted to comment on this obvious example of governmental inefficiency. I want to be contrarian.

First, government bureaucracy in the U.S is weak. In a typical bureaucracy (think Catholic Church, Army, GM, Starbucks) you have a pyramidal organization--the "operators" at the local level (churches, platoons, dealerships/factories, coffee shops), then a management hierarchy, often geographically organized. This is the way you combine local knowledge and ability to act with centralized management. FEMA and other governmental organizations don't have this complete hierarchy. What tends to happen is FEMA, or Department of Education, or whatever provides the centralized management, but the lower layers are State and local governments or nonexistent.

In the specific case described by the Post, there was no expertise on temporary covering of roofs (though it doesn't seem to require much expertise). So FEMA, through the layers of contractors as is right and proper in a nation so firmly convinced of the merits of private enterprise, created a temporary bureaucracy with the ability to cover roofs. Contrast this approach to disaster to that of USDA. USDA has a network of county offices throughout the country. When a disaster occurs or Congress authorizes a new disaster relief program for farmers, this existing bureaucracy springs into action and delivers the checks.

The USDA model works much more efficiently than the FEMA model but it also works much more often. It's like the old Maytag repairman ads--do you want to pay FEMA to have people sit around and do nothing for years? Or can you find enough other duties for a permanent FEMA bureaucracy to do (as USDA offices have ongoing farm programs to justify their existence)?

BCC Follies--How Not To Manage

John Tierney in today's Times (subscription required) has a column discussing the buck-passing that preceded the Iraq invasion. Summary: no planning because no one saw it as his responsibility.

The blame is that of Bush/Cheney/Card--the managers in charge. One thing any bureaucrat learns when you're dealing with an effort that spans multiple units is that your major effort must be to ensure that things don't fall through the gaps. You can trust people (almost all the time) to try to do their jobs. What you can't trust people to do is to define the boundaries of their jobs.

Astro-physicists talk of "black matter"--stuff they can't see or sense but which must exist because of the way the visible universe behaves. Similarly, there's dark matter in the social universe, a dark matter called fear of failure. An easy way to fail is to try something new, something chaotic, something undefined. So let people define their jobs and they'll define away any responsibility for things they don't know or they haven't done (successfully) before. Conversely, they'll devote their effort to the things they've done before, what they've trained to do.

So managers, like BCC, must constantly ask questions to see that their bureaucrats cover the gaps between units, use imagination to think ahead and around. Alternatively they may follow the FDR precedent--assign multiple bureaucracies to overlapping tasks, resulting in conflicts that must be resolved in the White House. But one way or the other Bush did it wrong.

When an Op-Ed Makes No Sense--Harvard for Free

Yesterday the LATimes published an oped, How Harvard could share the wealth,
proposing that Harvard use the income from its endowment to make itself free to all students. (The figures seem to work.) The writer's key point was the contrast between Harvard's wealth and the $41K it charges for tuition, suggesting that it needed to be accessible to the poor. But then the writer says:

"Two years ago, Summers took action to make Harvard more accessible. He declared that parents of undergraduates with family incomes less than $40,000 a year would no longer have to pay anything for their children's Harvard education. The expected payment from families with incomes under $60,000 would be cut greatly as well.

Summers said his initiative sent 'a powerful message that Harvard is open to talented students from all economic backgrounds.' The university reported that the enrollment of students in those income brackets rose 18%. But the 18% growth, when you do the math, means only an additional 45 students.

Harvard's message needs to be more powerful — at least as powerful as one ought to expect from an elite, 370-year-old, $26-billion institution. Dropping tuition, room and board charges for all students would be a gesture worthy of the institution."

So the bottom line is that Harvard is already free to students from families under $40K. So what's the effect of the writer's proposal? To make Harvard free for rich kids!!

Not something I want to support.

Family Ties

An interesting article in today's NYTimes on John Githongo, Kenyan whistleblower. What I found particularly fascinating were the allusions to the role that family and tribal ties played in corruption in Kenya.

On the one hand there's a pattern here, strong family ties tend to hold back "progress". Those who try to get ahead are obligated to take care of families. This is true in the Caribbean (see a book called "Crab Antics" (?to be checked), with Hispanic immigrants in the US, and apparently with Africans.

In the US corruption has often linked to family ties. Think of the Bolgers in Boston (although that's not corruption, but the relationship between the killer and his university president brother evokes the Godfather I.

My impression is that the pattern of family ties leading to corruption has not been true for WASP Americans. We're the greedy SOB's who're in it for ourselves, to hell with the rest of the world. Maybe that's why WASP's dominated the class system for so long

Benefits of Cruise Control

One of my beliefs is that Hegel was right, that thesis and antisynthesis is the way of the world, that physics is right--the equal and opposite reaction law, whichever one it is. Freedom often requires a countervailing force. Hence, my paean to cruise control, a feature on my new car with which I was previously unfamiliar. In taking a long drive yesterday, I found one of its benefits was to keep me to the speed limit (or a tad above) in situations where I'd usually find myself doing well above the limit. For example, on route 15 below Harrisburg the speed limit goes from 65 to 55 to 50 and I'd always have problems keeping my speed down in the 55/50 zones. After all, it was divided highway, the traffic was a bit heavier and access was less limited, but I tended to keep up with the locals. But with cruise control, I could make a decision and cut my feet and my irrational side out of the loop. Without cruise control, freedom was too much for me.

Implanted Patient-Data Chips--Ugh Factor and Who Benefits

The Post today has this article--Use of Implanted Patient-Data Chips Stirs Debate on Medicine vs. Privacy:

"The two D.C. residents are among just a handful of Americans who have had the tiny electronic VeriChip inserted since the government approved it two years ago. But the chip is being aggressively marketed by its manufacturer, which is targeting Washington to be the first metropolitan area with multiple hospitals equipped to read the device, a persuasive factor for Fischer and Hickey.

There's an "ugh" ("ick"??) factor to such chips. But there's also an overly easy knee-jerk reaction:

"...the concept alarms privacy advocates. They worry the devices could make it easier for unauthorized snoops to invade medical records. They also fear that the technology marks a dangerous step toward an Orwellian future in which people will be monitored using the chips or will be required to have them inserted for surveillance."

The question that needs to be asked is "why?", what is the motive, the potential gain for someone to snoop? People don't do things for no reason, so how would they gain from snooping into a 77-year old's medical history? I'm sure I'm not being imaginative enough, but as of now I don't see a big potential threat.

Why DC Cabbies Don't Come from Latin America

John Kelly had a column in the Post about the origins of DC cabdrivers. (Not sure the link to the list will work.) Here's an excerpt. Driving Around the World in D.C.: "Topping the list is Ethiopia. Of the 4,990 drivers that the commission has information on, 1,383 were born in that East African country. Next up was the United States, with 1,047."

What's notable, given that Latinos dominate in our immigrant population, is the absence of countries below the border. Why is that, I wonder?

Kelly's column suggests one answer is education/language. My impression is that most Hispanics who emigrate are lower middle class (they've got enough money to pay the coyotes but not much more). They might be uncomfortable navigating the bureaucratic ropes needed to learn to drive and get a cabbie's license, and dealing with customers. At least one driver he rode with had a college degree and suggested it was a good stopgap job.

Another answer might be the first-mover phenomena: an initial pioneer comes to the U.S. and finds a job, he tells his relatives and neighbors back home and they follow. That's one reason for Irish cops in NYC, Koreans in groceries and dry cleaning, and Patels in motel ownership.

Immigration and Crime

Tyler Cowan at Volokh.com links to an op-ed in the Times on the relationship of immigration and the crime rate. The professor says that studies show that immigrants have a lower crime rate than natives, more generally that Hispanics do better on socio-economic indicators than would be expected at the gross level. (i.e., many immigrants are young males living apart from women, the group we'd expect to have the highest crime rate.)

As I said in comments there, I think the professor oversells his thesis, but it is a reminder not to generalize. It would also be interesting to look at the cultural patterns related to years of residence of family (i.e., obesity, cancer rates, etc. etc.)