That UVA rape story is fishy

Let me get this straight. The author of this trending story on rape at UVA wants us to believe that…

1. The fraternity decided to rape a sober girl and then did nothing to prevent her from reporting the rape afterwards. One guy even mentioned it to her when he saw her later on.

2. Jackie’s best friend Cindy, who was so quick to come get her at 3 a.m. in the morning, didn’t take her to the hospital because “her reputation would be shot” and they might “never be allowed into a frat party again.”

3. Jackie’s best friends Andy and Randall weren’t dissuaded from rushing this fraternity after seven of its members gang-raped her. Randall even joined the fraternity later on.

I have a hard time believing these details. I think they are either outright false or a gross exaggeration.

…or the average student at UVA (an above-average school) really is that stupid and that willing to put their social reputation before justice for rape victims. I guess that’s not totally inconceivable. But if that’s the case, and if this attitude is typical among the average college student (or, at least, the average student at UVA), then I’m not sure this problem will ever be solved. If even people closest to the problem could care less about finding justice, then people up the ranks sure aren’t going to expend too much effort trying to get to the bottom of things. Can administrators even trust the average student’s testimony? Will Jackie’s friends be honest on a witness stand if this case makes it to court? If this story is true, there’s no telling. I think even the author should admit that.

On that note, if I’m right and some of these details are made up, then the author has only hurt the cause of justice by ruining hopes that working with students is going to yield any good, quick outcomes. Same thing if I’m wrong and this really is how the story went down. These students are totally, and almost hopelessly, messed up.

The first step toward solving systemic problems like this is to get the facts straight. Unfortunately, I don’t think this story does that.

The Fed to investigate itself for regulatory capture

I’ve written before about regulatory capture at the Fed. Now even the Fed has been forced to respond, but they still don’t seem to take all this seriously. According to Fortune,

William Dudley, who heads the New York Fed and is consequently responsible for supervising most of the country’s largest banks, will tell a Senate committee later today that a new review into its supervisory practises will look specifically at the issue of ‘regulatory capture’–the idea that a supervisor tasked with upholding the public interest ends up under the influence of the companies it is supposed to be monitoring.

This report implies that the Fed will investigate itself for regulatory capture. Doesn’t that ruin the point? What about regulatory capture of this review? Will the Fed later investigate this investigative process for signs of corruption?

If they were serious about removing the influence of regulatory capture from their decision-making processes, they’d bring in outsiders–qualified critics of the Fed who’ve been investigating this for years. Experts who know what regulatory capture looks like. Investigators who aren’t on the Fed’s payroll.

For the cherry on top, note that most allegations of regulatory capture in the past regard Goldman Sachs—Dudley’s old employer. I assume he’ll be investigating himself, too?

Here’s Dudley himself responding to the Fed’s critics.

I don’t think anyone should question our motives or what we are attempting to accomplish.

This says lots about the Fed supervisors’ mindsets, I think, and explains the habitual lack of seriousness with which they’ve takes these allegations. Call it a power trip, groupthink, a delusion of granduer…whatever it is, it’s not right.

For more reading on this investigation, I suggest this Financial Times report.

The problem is public accommodation

Media pundits like to pitch cases like Hitching Post as attacks on religious liberty. Religious freedom issues are great for ratings, after all. They rile people up.

For those who don’t know, the owners of Hitching Post Wedding Chapel were recently ordered to conduct a same-sex wedding ceremony despite their religious objection. If they refuse, they face jail time and up to $1,000 in fines for every day they continue to refuse.

But cases like Hitching Post aren’t really issues of religious freedom—at least not directly, or in terms of how the law is written. They’re about economic freedom. They have to do with the doctrine of “public accommodation,” by which the government can force businesses to service particular types of customers. As the law stands, any business open to the public must service customers regardless of race, disability, sex, sexual orientation. Business owners’ beliefs and opinions, including their religious objections, don’t matter.

President Lyndon Johnson signs the Civil Rights Act of 1964 as Martin Luther King, Jr., and others, look on.

That’s the fundamental problem. It started with the Civil Rights Act of 1964.

Some might counter that Hitching Post’s objection is rooted in religion and not the racism targeted by the Civil Rights Act. Therefore, it’s not really an issue of public accommodation akin to a white hotel owner refusing black customers. It’s a matter of being forced to behave in ways contrary to an intimately-held religious belief.

But racism could conceivably have religious roots, too. In fact, it unfortunately did for centuries. Until those who care about their liberties are willing to put aside their fear of social and political ostracism and admit that the letter of the Civil Rights Act itself is a problem, they’ll never get anywhere. Slowly but surely, their respect for “political correctness”—even if unenthusiastic—will leave them, us, with nothing left to defend.

Remember Elaine Huguenin? She lost her case last year after refusing to photograph a lesbian wedding ceremony on the grounds of public accommodation. Rulings like this will happen over and over again because they’re the only ruling consistent with the public accommodation doctrine. Expect nothing different until that doctrine is rigorously challenged.

I have a longer, more formal piece on public accommodation being published tomorrow. I’ll post a link here when it’s available.

Brace for more stupid, unwarranted Islamophobia

Mark my words: Mainstream media pundits will make a big deal out of the fact that the gunman in Ottowa today was a Muslim. In fact, they usually only use the word “terrorist” when the perpetrator was a Muslim.

That’s sad, because most terrorists aren’t actually Muslim. In fact, between 9/11 and 2012, only 33 of the more than 300 Americans killed by terrorist acts died at the hands of Muslims. I don’t want to downplay that number, but consider that more than 180,000 Americans were murdered during this time for reasons unrelated to terrorism, or that the Virginia Tech shooter alone killed 32—just one less person.

I also notice a tendency among media pundits to blame Islam when a criminal is Muslim like they blame guns when a criminal is either insane or has no obvious motive. Many accept the first tendency yet decry the second by pointing out that only a minuscule fraction of guns are used to kill innocent people. But we can’t have our cake and eat it, too. If blaming guns is wrong because guns are almost always used responsibly, then blaming Islam must also be wrong because Muslims are almost always not terrorists.

No matter what anyone tells you about the “inherent violence of Islam” or Muslims’ tendency toward terrorism against Western targets, remember that more than seven million Muslims live in the United States today who have never committed a terrorist act. These people live in our neighborhoods. Their children go to our schools. They work at our banks, our pools, our grocery stores, our city halls. Saying Islam is inherently violent is like saying driving is safer than flying–it’s simply false, based entirely on ‘gut feeling’ and not on real-world data.

I don’t want to defend Islam. I’m not a Muslim. I think Muslims are wrong. I hate the way many of them treat women. But I also hate false information–especially when it leads to unwarranted fear.

Fight Ebola yourself

No, I don’t mean that title to be offensive or flippant.

It’s actually a summation of my article today at Values & Capitalism. In it, I explain why combating Ebola doesn’t require broad-based federal action. Instead of whining about why the CDC won’t step up, why not take steps yourself? On an individual level, yes, but also at an organizational level. We aren’t helpless, after all. That’s what libertarians and conservatives believe about everything else. Why shouldn’t it apply to disease control?

Take Firestone Tire and Rubber, for example. When Ebola showed up near their rubber plantation in Harbel, Liberia, they took drastic measures to combat the virus. The result: The virtual disappearance of Ebola in their town, despite it’s proliferation across neighboring towns and the rest of the country.

You can read my article at this link. Hope you enjoy.

For your own sake, don’t politicize Ebola

Conservatives: Just because Obama is a liberal doesn’t mean none of his administration’s Ebola strategies make sense. If it were President Romney explaining why a flight ban won’t help anything, would you be so up in arms?

And since when is a crisis reason enough to abandon free market principles? Conservatives have always hated the CDC. Now they’re blaming Obama for proposing cuts to CDC’s budget back in 2011. They want CDC to do even more! It reminds me of post-9/11 (not that I remember that period…I’ve only read the history), when conservatives were all for war in Afghanistan, the TSA, the Patriot Act. Once Obama was elected, all those things became evil. This is why I rarely vote for Republicans, and didn’t in 2012. Once they’re in power, true free market principles in America virtually disappear!

I’m a free market guy. I like most conservatives. But using a virus that is killing thousands to score political points and attack Obama is pretty low. The reasons why a flight ban won’t work should, I think, make sense to anyone willing to consider the merits of the decision itself instead of criticizing the people making the decision.

This issue hits home for me. My wife is a nurse, and a suspected Ebola case showed up in her hospital late last week (this has been reported in the news…I’m not disclosing confidential information). If she’d had been asked to treat this patient, she’d have done it willingly. Then she’d have come home in the morning, knowing that sensible precautions were taken. Of course, even the best precautions won’t work 100 percent of the time. Thus the Dallas nurse infected last week. But to achieve any success at all, risks have to be taken. It’s vitally important that those risks be understood in light of the facts, not political grudges. If not, we risk putting people like my wife in danger.

For example, consider if a flight ban were mandated. Are hospitals to quit asking if a patient had come from west Africa? They might as well. What patient is going to admit having broken the law if they somehow breached the barricade? This puts Americans in more danger than they are now–nurses most of all.

Then imagine if a patient did admit to evading the flight ban. Mass hysteria would break out. No one with a West African (or probably any African) accent would be trusted. Perceptions of risk would be incalculable, as the number of recent visitors to west Africa in the United States would be unknown. The economy would suffer, and more harm would come to Americans than what would have come otherwise.

The choice is between calculable risk (no flight ban) and incalculable risk (flight ban). Use your brain and think about this. Forget that it’s Obama in power. Forget that the CDC Chief is a poor speaker. Consider the facts and think about the administration’s reasoning. Obama’s made tons of mistakes, but this isn’t one of them.

Corruption at the Fed

Senators Elizabeth Warren and Sherrod Brown have called for an investigation of the Federal Reserve Bank of New York. This comes as a response to a ProPublica article by Jake Bernstein, true yeoman’s work, that exposes an all-too-cozy relationship between the Fed and Goldman Sachs. Relying on secret recordings made by a former Fed compliance attorney, he writes:

In a tense, 40-minute meeting recorded the week before she was fired, Segarra’s boss repeatedly tries to persuade her to change her conclusion that Goldman was missing a policy to handle conflicts of interest. Segarra offered to review her evidence with higher-ups and told her boss she would accept being overruled once her findings were submitted. It wasn’t enough.

“Why do you have to say there’s no policy?” her boss said near the end of the grueling session.

“Professionally,” Segarra responded, “I cannot agree.”

The New York Fed disputes Segarra’s claim that she was fired in retaliation.

As far as I can tell, this story boils down to the firing of Carmen Segarra, an “expert examiner” hired by the Fed who dared to ask questions of her Fed boss about Goldman Sachs’ nonexistent conflict of interest policy. The concern here is that Goldman Sachs has undue influence over policy making at the New York Fed–more specifically, that Fed officials aren’t willing to hold Goldman Sachs accountable.

A classic case of regulatory capture, if you ask me. And why aren’t Republicans on top of issues like this? Where’s Rand Paul? I like most Republicans, but their apparent unwillingness to involve themselves in issues like this–issues other than run-of-the-mill low taxes, less regulation, more freedom, etc.–will doom them among young voters, if it hasn’t already.

Update: Apparently Michael Lewis has covered this story for Bloomberg. He highlights the following quote that should get people’s attention:

for instance, in one meeting a Goldman employee expressed the view that “once clients are wealthy enough certain consumer laws don’t apply to them.” After that meeting, Segarra turned to a fellow Fed regulator and said how surprised she was by that statement — to which the regulator replied, “You didn’t hear that.”

ISIS, meet Mises?

John Tamny has a great column over at Forbes that pinpoints my exact frustrations with reporting on ISIS and its supposed threat to our national security. He writes:

In reality, the entity that has left and right up in arms in search of a muscular response was born in a part of the world that is one of the least productive economically, that can’t claim to create even one consumer good (the oil wealth there is largely a creation of western ingenuity) that is desired by global consumers, that can’t claim even one university that would appeal to the best and brightest. Despite this, numerous wise eyes are on ISIS?

…

Mises likely would have mocked today’s consensus precisely because the basis of ISIS’s existence is one of theft, coercion, or both

…

It doesn’t take several Foreign Affairs columnists to deduce that there probably isn’t a collection of Thomas Jeffersons and George Washingtons at the top of an entity that has Washington transfixed (ISIS). Figure our political class can’t agree on much of anything (this latest alleged terrorist threat once again a rare example of consensus), the fighting is constant, yet somehow we’re supposed to believe that a criminal organization’s activities are defined by competent consensus and quietude at the top such that failure to respond now dooms us to eventual massacre in the cities and states we live in?

Except for the fact that these are really just general common sense insights and not unique to the Austrian school, these are my thoughts exactly. For some reason, commentators seem to exempt terrorist organizations from the same challenges that face other associations of thinking people. It’s hard enough to get a family of five to agree on where to go out for dinner, let alone convince an entire army to wage a holy war that even they can see has zero prospect for success.

Take the mainstream media seriously, and you’d be led to believe that ISIS militants never doubt the legitimacy of their convictions (unlike everyone else in the world), never question their leaders’ intents (unlike everyone else in the world), and literally won’t stop until they are dead (unlike everyone else in the world). While this might be true of some of them, it’s definitely not true of all of them.

You’d also be led to believe that these people all join ISIS for the same reason and with the same individual goals. Is that true of the U.S. military? Of your local police force? Of the Republican Party? Of any association of even like-minded people? Nope.

You’ll also be convinced that, for some reason, the Islamic youths who voluntarily join ISIS aren’t like youths of every other culture in their propensity to quit when the going gets tough, look out for themselves first and foremost, and engage in reckless behavior that endangers their own well-being. No, these terrorists are alleged to be always thinking about their ultimate goal, even when they likely have no clue where to find their next meal.

I’ve heard about a lot of evil things ISIS terrorists are doing in the Middle East. I hope they stop. But there’s no reason to believe they pose a unique, never-before-seen threat to the very life of the American people.

Finally, here’s a hilariously serious Fox News report on a Texas sheriff preparing for an ISIS attack across the Mexican border. Apparently he heard ISIS was “moving around” near Juarez. And, of course, someone somewhere found a “Koran books” on the border (which can only mean ISIS, right?).

The Ebola epidemic is getting worse

According to Michael T. Osterholm, director of the Center for Infectious Disease Research and Policy at the University of Minnesota, Liberia has only 250 doctors left in the wake of the growing Ebola epidemic. The country’s population tops 4 million. From the New York Times :

Because people are now too afraid of contracting Ebola to go to the hospital, very few are getting basic medical care. In addition, many health care workers have been infected with Ebola, and more than 120 have died. Liberia has only 250 doctors left, for a population of four million.

That’s a 1:16,369 doctor-population ratio. To put that in perspective, that ratio in the United States is around 1:413.

Blowback in Syria?

From Abigail Hall, writing in The Beacon this morning regarding President Obama’s plan to arm “moderate” Syrian rebels:

Syria’s regime is unfriendly to the U.S. The country is in the midst of an ongoing civil war with a death toll considered tragic on any margin. But the idea that the U.S. can arm rebels and keep weapons in “responsible and moderate” hands is unfounded in theory and practice. If the U.S. were to send weapons to Syria, there are no guarantees how such weapons would be used, who would ultimately possess them, or how such an arrangement would change conditions over time. If Afghanistan and other U.S. ventures into the Middle East are any indication, there is a very real possibility that weapons sent to protect U.S. interests today could be used to threaten them tomorrow.

A good word. Where I’m skeptical, though, is whether what President Obama says is what President Obama does. I usually avoid foreign policy debates for this very reason–foreign policy is hopelessly complex and so much of it is conducted in secret. How do we know the information we get from the media reflects what’s actually happening on the ground? We’re all in the dark, really.

Be careful with LFPR!

The Labor Force Participation Rate (LFPR) is calculated monthly by the Bureau of Labor Statistics (BLS). It’s defined by the BLS as “the labor force as a percent of the civilian noninstitutional population.”

This seems straightforward enough, but I’ve seen many analysts misinterpret what the LFPR actually measures–especially as it’s been in a sort of free fall for the past several years–and therefore misapply it when gauging the health of the labor force.

Here’s the key: For the BLS, the “labor force” includes everyone who is either employed or unemployed-but-seeking-employment. This means that LFPR, labor force participation rate, does not fall when more people become unemployed. It falls when people drop out of the labor force entirely.

In other words, LFPR changes only when the percentage of people not seeking work changes relative to the total number of working-age people.

Of course, some of those people dropping out of the labor force are what the BLS calls “discouraged workers“–people who are not looking for a job, but want and are available for work. In this case, a falling LFPR can indicate hard times. But recent research shows that such workers are not the biggest reason for the LFPR’s decline. Shigeru Fujita at the Federal Reserve Bank of Philadelphia shows that an accelerating rate of retirement, coinciding with the aging of America’s workforce, is behind much of the decline (which, for that matter, began in 2000–long before the 2008 recession). Of those who dropped out of the labor force for reasons other than either retirement or becoming disabled, those in school comprise the fastest subset of working-age people not seeking work.

So LFPR should never be used as a standalone measure of the health of the labor force. Nor can it’s decline serve as a “check” on the falling unemployment rate without analyzing the causes of that decline. Indeed, the LFPR fell almost every year from 1956 to 1964, during which time GDP grew by roughly 50 percent. Same story between 1998 and 2008.

To conclude, I’ll pose an interesting question: Should we expect LFPR to rise or fall as the population becomes wealthier in general? Will more or less people be working in, say, the year 2100, when (I hope) we’ll be more productive than we are today? (Hint: The answer has to do with the labor-leisure trade-off.)

Some police force data

Some interesting facts about police in America. From the FBI (via Governing.com):

Washington, D.C. is the most policed city in America. It employs 61.2 officers for every 10,000 residents (excluding nonresident commuters, who exceed the city’s nighttime population).
Los Angeles employs 25.9 officers for every 10,000 residents (excluding non-resident commuters).
Youngstown, OH–a top-ten most dangerous city in America–employs 22.7 officers per 10,000 residents.
Detroit, the most dangerous city in America, employs 36.3 officers for every 10,000 residents.
In 2007, according to the BJS, municipal and township police departments employed an average of 2.3 officers per 1,000 residents. This puts the United States among the bottom half of all countries when it comes to police per capita.

As far as I know, this data does not include police employed by states or federal agents of any type.

I find this information useful toward putting the debate about America’s growing “police state” in context. No, we don’t live in communities dominated by police presence. We aren’t even close to the most heavily-policed society in the world. This has nothing to say about growing police budgets and militarized police forces, of course. It simply puts specific numbers to an issue often discussed in overly- and unhelpfully-general terms.

No one actually reads Piketty’s book

Hardly anyone actually finishes Thomas Piketty’s Capital in the Twenty-First Century. According to University of Wisconsin professor Jordan Ellenberg writing at wsj.com last Thursday, only 2.4 percent of readers actually make it to the end of the book.

Of course, we can’t know this for sure. Ellenberg admits this study is for “entertainment purposes only.” The number is based on where in the book Kindle users tend to highlight passages (Kindle users’ highlighted passages are made public). Ellenberg explains:

How can we find today’s greatest non-reads? Amazon’s “Popular Highlights” feature provides one quick and dirty measure. Every book’s Kindle page lists the five passages most highlighted by readers. If every reader is getting to the end, those highlights could be scattered throughout the length of the book. If nobody has made it past the introduction, the popular highlights will be clustered at the beginning.

In the case of Piketty’s book, the last of the top-five most highlighted passages occurs on page 26. That’s not very far, considering the book is more than 700 pages long. So even with a huge margin of error, it seems few people are actually reading Piketty’s book.

But should anyone be surprised? It’s a dense pseudo-textbook on economic theory. I’m just glad people are thinking about these issues, even if wrongly.

Obamacare as jobs creator? Not so fast.

According to Thomas Black and Caelainn Barr writing at Bloomberg.com this morning, 2014’s surging hiring pace indicates broad economic recovery. Whether this is driven by stronger fundamentals or the illusions of easy money is yet to be seen.

But my reason for highlighting this article is for one particular phrase near the end:

Positions for software developers, computer systems analysts and financial compliance officers are getting hard to fill, said Paul McDonald, senior executive director at Robert Half International, Inc., the Menlo Park, California-based professional employment service company.

The boom in technology has driven the unemployment rate below 1 percent in the industry. New financial regulations and requirements for the Affordable Care Act are also boosting demand for professionals, he said.

I added the emphasis in the second paragraph. Even the slightest bit of thinking about this comment should lead you to understand that these new jobs aren’t actually a positive development. That’s because, I’ll remind you, more employment itself is not necessarily a good thing. More employment only indicates economic growth if the new jobs create real value–something ACA compliance officers probably don’t do. Of course, executives wouldn’t hire such compliance officers if they weren’t convinced such officers add value to their companies (even if, at the very least, by keeping them out of trouble with the IRS/HHS). But compliance officers don’t necessarily add value to the real economy.

For example, consider the hypothetical ABC Company. Since the beginning of 2014, ABC Company has spent $50,000 on ACA compliance initiatives. This was money that could have been invested elsewhere, like R&D or towards hiring another salesperson. Instead, it was “invested” toward ensuring compliance with an overbearing state regulation that itself impedes economic growth, and that the ABC ‘s owners are more than likely to believe either doesn’t help or harms their company’s long-term prospects. In effect, this is hardly different than simply giving $50,000 to some stranger on the street.

I’m reminded of the famous Milton Friedman/William Aberhart quote regarding government program jobs:

At one of our dinners, Milton recalled traveling to an Asian country in the 1960s and visiting a worksite where a new canal was being built. He was shocked to see that, instead of modern tractors and earth movers, the workers had shovels. He asked why there were so few machines. The government bureaucrat explained, “You don’t understand. This is a jobs program.” Milton replied, “Oh, I thought you were trying to build a canal. If it’s the jobs you want, then you should give these workers spoons, not shovels.”

While this story is not about regulatory compliance, it might as well be. Creating jobs by requiring spoons instead of shovels is hardly different than creating jobs by requiring companies to hire more people to ensure compliance with new, confusing, overbearing and unwanted regulation. In both cases, business owners are hiring people they wouldn’t have otherwise hired for the sole purpose of complying with rules they don’t believe will help their businesses.

Finally, on a somewhat related note, new government audit reports reveal Obamacare is still a total mess. Sources here and here.

Response to my Brat article’s critics

I’ve noticed that comments on my piece at The Freeman today have been largely negative. Most of the negativity surrounds my claim that immigrants don’t come to the United States to become unemployed, and will therefore stop coming en masse when there are no jobs for them. I’m wrong, the commenters say, because immigrants are incented to come for the welfare benefits and therefore open borders is a bad idea and only makes things worse.

Boiled down, however, what these commenters are saying is that because we have a bad form of government intervention (welfare), we should create another bad form of government intervention (border fence/stifling free movement of labor) to counteract it. Just like the statists many of them claim to despise, they advocate for more government intervention to solve problems created by previous forms of government intervention.

Also, what many of my critics implicitly assume is that we somehow slow the progression of the welfare state and bankrupting of the United States government by limiting immigration. We have this terrible welfare system, they say, that perverts incentives and slows economic growth. We should forbid free movement of labor into the country for that reason because, I’m guessing, they think the system is sustainable or won’t get worse otherwise. To that I say: Couldn’t the effect by exactly the opposite? Could not the free entry of labor into the country spur more economic growth that outpaces additional strain on the welfare system? Could not restricting immigration slow economic growth and leave even a higher proportion of Americans unemployed and demanding/earning welfare handouts? Is not this alternative equally as feasible as the other? In light of historical data about immigration’s effect on economic growth, I’d say my proposed alternative is far more likely.

Finally, I will admit that some immigrants come to the United States to live off welfare. My guess, however, is that this includes less than one percent of them. Firstly, illegal immigrants cannot receive welfare. Secondly, legal immigrants must reside in the United States for five years before they are eligible to become a citizen and receive welfare. This means that if someone does indeed want to come to the United States to live off the welfare system (which still leaves them in poverty), they must be able to work and support themselves for five years–not something I’d suspect people want to do who are so lazy they’d rather change countries than go to work.

I have more thoughts on this issue. I’ll post them here later.

Nick Freiling

blog & portfolio

Category Archives: Current Affairs