If you’re so smart, why aren’t you rich?

[Trausti]

Your response is evidence that the reasoning gene is not passed down from parents.

Your response is evidence that you do not understand the meaning of the word "confounding". Or of "evidence".

Not to anyone who read the cited article and who can reason - I will explain. The cited article to which Trausti responded found that success is better predicted by one's parents wealth than intelligence. Which strongly suggests that the researchers either did not know or that it does not matter that successful parents pass on the "successful genes" to their parents which answers Trausti's question.

You really don't understand the meaning confounding.

 

[Trausti]

Things people inherit from their parents:

Geographic location
Culture
Wealth
Support network
Race
Language
Education opportunities
DNA

Georgetown study: ‘To succeed in America, it’s better to be born rich than smart’

RaCe rEaLiSts: Must be the DNA, which makes them smart even though the article says being born smart doesn't matter

The ghost of Lysenko haunts us still.

 

[ZiprHead]

Things people inherit from their parents:

Geographic location
Culture
Wealth
Support network
Race
Language
Education opportunities
DNA

Georgetown study: ‘To succeed in America, it’s better to be born rich than smart’

RaCe rEaLiSts: Must be the DNA, which makes them smart even though the article says being born smart doesn't matter

The ghost of Lysenko haunts us still.

The ghost of Ray Charles haunts you.

 

[Loren Pechtel]

"Absolute Gini" is a goofy measure. (And a misnomer -- if Corrado Gini had anything whatsoever to do with that measure I'll be very surprised. Surely some lesser mind invented "Absolute Gini" and wanted to associate Gini's name with it to give it some cachet.) If we go from Bill making $20,000 and Joe making $100,000 to Bill making $100,000 and Joe making $200,000, their Gini index dropped a lot, reflecting that Bill is now making 1/3 of the income rather than only 1/6; but the "Absolute Gini" rose. And yet the changed situation is a massive improvement for the poorer man. To rely on the "absolute Gini" as an indication of the condition of the less fortunate in society is to treat the rising tide lifting all boats as a bad thing.

Unfortunately, I've seen all too many on the left that are more concerned with dragging Joe down than in improving Bill's lot.

 

[Loren Pechtel]

Things people inherit from their parents:

Geographic location
Culture
Wealth
Support network
Race
Language
Education opportunities
DNA

Georgetown study: ‘To succeed in America, it’s better to be born rich than smart’

RaCe rEaLiSts: Must be the DNA, which makes them smart even though the article says being born smart doesn't matter

The ghost of Lysenko haunts us still.

It's only the racists that focus on the DNA aspect. Those of us who are after a colorblind society understand it's the stuff at the top of the list that matters.

 

[Bomb#20]

B20: Here, https://www.multpl.com/us-real-gdp-per-capita , you can see a chart of the U.S.'s inflation-adjusted per capita GDP. As you can see, it curves upward over the period we're discussing.
CDJ: No it doesn't, it slopes upwards, meaning per capita production rose. A rise in the rate of change of a variable is not the same as a rise in the variable itself.
B20: Look at the bloody chart again. The fact that it slopes upward does not change the fact that it also curves upward!

I'd expect it to curve up slightly for reasons you've edited out

...because we already beat that horse to death...

and the difference in growth rate to be indescernible "by simple inspection", which it is. You'd need a graph with growth rate (not output) on the y-axis to discern that "by simple inspection".

But I didn't claim the growth rate rose. I claimed the increase in per capita production is accelerating. Your insistence on talking about growth rates -- i.e. your insistence on choosing an exponential function as the benchmark for judging whether productivity is being enhanced or retarded -- has still not been justified.

Exactly which part of "$500 per capita per year from 1947 to 1979. $657 per capita per year from 1979 to 2009." don't you understand?

What exactly it quantifies. First, yer data is GDP per capita so we don't know whether, or which, changes in the dollar quantities are due to changes in GDP or capita.

Both. Population rose, and production rose faster.

Then, your wording suggests averaged absolute annual output increases (albeit per capita) over each of the two periods.

Sounds like you do understand exactly what it quantifies. (And I wouldn't have thought my wording "suggests" that; I thought I said it flat out.) So why the heck were you insulting my intelligence with "If you ease off the accelerator in your car, it keeps going forward at a slower pace." The economic accelerator is being pressed harder and the per capita production keeps going at a faster pace. You know what acceleration is, don't you? It's the second derivative of position. Do you know how to calculate a second derivative?

Even if the growth rate were constant, average absolute increase over any later period will be greater simply because of the higher starting point. What you need is to compare the respective annual average % increases

No, that's what you need me to do, in order for you to get away with calling a rise a fall. Why on earth would I need to go along with your arbitrary requirement that growth be exponential in order to count as rising?

...in fact all you need have done was scroll down the page you linked to and click on "US Real GDP Growth Rate" to reveal a graph with growth rate on the y-axis, where you can discern "by simple inspection" that growth rates have certainly not accelerated as you claim.

Now you are just putting words in my mouth. Have you even listened to a bloody thing I've said? I have explicitly NOT claimed "growth rates" have accelerated; what I have done is spend multiple rounds with you challenging your premise that "growth rates" are the proper way to measure productivity increase. "Growth rate" is just another way to say "I'm comparing with an exponential". Growth has accelerated, subexponentially.

Because you keep describing a rise as a fall. See above.

Because growth rates have fallen. See above.

That is not a good reason. The word "fall" does not mean "subexponential rise". Check a dictionary if you don't believe me, and then make a note of it.

Nothing to do with anyone's preferences. Nor does the reason for comparing rates have anything to with exponential growth.

It has everything to do with exponential growth. Production levels, like prices, are noisy fractals. To summarize what they do over an extended period with a single number is to approximate them

Yes

by discarding most of the information

No

No? How many bits do you think it takes to record a noisy fractal? How many bits do you think it takes to record an average growth rate?

and curve-fitting them to a math formula with one adjustable coefficient. When that single number is a "growth rate" instead of some other parameter, that's just another way to say "the math formula we chose to curve-fit them to was an exponential function". That's what the phrase "growth rate" means.

Which just means comparing growth rates is a somewhat inexact business; nothing to do with anyone's "arbitrary choice of a preferred measurement function".

Everything to do with an arbitrary choice of a preferred measurement function. For instance, if you curve-fit that same fractal to a parabola instead of to an exponential, you don't get a growth rate at all -- you get a second derivative -- an acceleration. A parabola curves up but an exponential curves up faster. Why should the exponential rather than the parabola get to define whether growth is rising? Other than that you prefer it because you prefer putting that spin on the numbers.

You appear to be missing the point. If you're right, then neoliberalism caused a 20% reduction in a quantity that repeatedly sees 300% [etc]

then you appear to be missing the point since growth rates certainly do not repeatedly see 300% jumps. If growth rate drops from 4% to 2%, you've lost half your growth, not half your output.

It's your bloody graph! Look at at! The growth rate jumped 300% between 1835 and 1875, and did it again between 1922 and 1942, and did it again between 1945 and 1973. (A 300% jump is a quadrupling of the growth rate, for instance from 0.6 to 2.4, the same way the drop from 2.5% to 2% that you're attributing to neoliberalism was a 20% drop.)

In any event, a lot of things happened in the world since your 1973 peak besides neoliberalism. If you need something to blame, um, how about OPEC massively raising the price of oil? How about first Japan and then the rest of East Asia getting good at making things people used to import from Britain? How about Britain getting paralyzed by strike after strike? I can't help but notice your chart showing the sudden significant inflection happened several years before Thatcher brought in all her nasty neoliberalism.

Yep a lot of things happened like North Sea oil, the end of the cold war, the IT revolution... It'd be hard to argue that it's down to a preponderance of exogenous shocks, and not even the staunchest defender of neoliberalism does.

So who did that? All those strikes were endogenous shocks.

All what strikes? Strikes fell off to the lowest levels on record (as has wage growth).

These strikes: http://www.nationalarchives.gov.uk/cabinetpapers/alevelstudies/1960-radicalisation.htm

The end of the cold war was long after your inflection point. And, once again, so was neoliberalism. Your argument would be weak enough if it were post hoc ergo propter hoc, but you're trying to sell pre hoc ergo propter hoc. Effects do not precede their causes.

And no one's saying otherwise. The effect is the relatively weak growth of the neoliberal era.

No one's saying otherwise? I thought you were blaming neoliberalism for the weak growth. But according to your chart the growth suddenly started weakening six years before neoliberalism was adopted. The worst one can say about neoliberalism is that, whatever caused the weakening, neoliberalism was no more able to fix it than earlier attempts were.

And unlike the "The rich/poor gap has increased in nearly all countries" Gini charts people show, it's a graph of inequality based on data that wasn't cherry-picked.

It's from the same data.

What's your point? If you take data that shows inequality declining, and then you look at only the U.S. data and it shows inequality rising within the U.S., sure it's from the same data, but you cherry-picked it.

But it doesn't look "only at the US data", and I didn't pick it at all, cherry or otherwise.

Sorry, I guess I was unclear. If you look at the U.S. data and compare Americans with other Americans to show inequality rising within the U.S., and you also look at the British data and compare Britons with other Britons to show inequality rising within Britain, and you also look at the Thai data and compare Thais with other Thais to show inequality rising within Thailand, and you repeat that process for all 200 countries and thereby look at *all* the data, which is what you need to do to be able to say "The rich/poor gap has increased in nearly all countries", then that is cherry-picking. The choice to compare each country's people with others from within the same country, instead of comparing them with the whole world, is nothing but 200 separate acts of cherry-picking.

Let me rephrase. If it's important to make poor Englishmen richer because that will increase growth rates, why isn't it even more important to make even poorer Chinese people richer? Won't that increase growth rates too? Or does that not help, because poorer Chinese people live so far away from rich Englishmen that the rich-poor gap is inconspicuous?

It's important that growth rates and aggregate demand are sustained. Outsourcing to relatively low wage/low productivity countries like China reduces both.

So does that principle apply within countries as well? If rich Britons trade with poor Britons instead of with middle-class Britons, raising the standard of living of the poor while the middle-class stagnates, does that reduce growth rates and aggregate demand too?

"Absolute Gini" is a goofy measure. (And a misnomer -- if Corrado Gini had anything whatsoever to do with that measure I'll be very surprised. Surely some lesser mind invented "Absolute Gini" and wanted to associate Gini's name with it to give it some cachet.) If we go from Bill making $20,000 and Joe making $100,000 to Bill making $100,000 and Joe making $200,000, their Gini index dropped a lot, reflecting that Bill is now making 1/3 of the income rather than only 1/6; but the "Absolute Gini" rose. And yet the changed situation is a massive improvement for the poorer man. To rely on the "absolute Gini" as an indication of the condition of the less fortunate in society is to treat the rising tide lifting all boats as a bad thing.

But not as massive as if the proportions had remained the same.

Say what? If the proportions had remained the same Bill would be making $50,000 while Joe was making $250,000. That's a lot less massive.

The question then becomes under which kind of distribution does the tide rise highest. The neoliberal assumption - "Okun's Tradeoff" - was a growth vs inequality tradeoff, which certainly ain't been borne out by 40 years of neoliberalism.

How do you know? How did you compute how high the tide would have been if neoliberalism had never been adopted?

 

[Canard DuJour]

...because we already beat that horse to death...

and the difference in growth rate to be indescernible "by simple inspection", which it is. You'd need a graph with growth rate (not output) on the y-axis to discern that "by simple inspection".

But I didn't claim the growth rate rose. I claimed the increase in per capita production is accelerating. Your insistence on talking about growth rates -- i.e. your insistence on choosing an exponential function as the benchmark for judging whether productivity is being enhanced or retarded -- has still not been justified.

Exactly which part of "$500 per capita per year from 1947 to 1979. $657 per capita per year from 1979 to 2009." don't you understand?

What exactly it quantifies. First, yer data is GDP per capita so we don't know whether, or which, changes in the dollar quantities are due to changes in GDP or capita.

Both. Population rose, and production rose faster.

Then, your wording suggests averaged absolute annual output increases (albeit per capita) over each of the two periods.

Sounds like you do understand exactly what it quantifies. (And I wouldn't have thought my wording "suggests" that; I thought I said it flat out.) So why the heck were you insulting my intelligence with "If you ease off the accelerator in your car, it keeps going forward at a slower pace." The economic accelerator is being pressed harder and the per capita production keeps going at a faster pace. You know what acceleration is, don't you? It's the second derivative of position. Do you know how to calculate a second derivative?

Even if the growth rate were constant, average absolute increase over any later period will be greater simply because of the higher starting point. What you need is to compare the respective annual average % increases

No, that's what you need me to do, in order for you to get away with calling a rise a fall. Why on earth would I need to go along with your arbitrary requirement that growth be exponential in order to count as rising?

...in fact all you need have done was scroll down the page you linked to and click on "US Real GDP Growth Rate" to reveal a graph with growth rate on the y-axis, where you can discern "by simple inspection" that growth rates have certainly not accelerated as you claim.

Now you are just putting words in my mouth. Have you even listened to a bloody thing I've said? I have explicitly NOT claimed "growth rates" have accelerated; what I have done is spend multiple rounds with you challenging your premise that "growth rates" are the proper way to measure productivity increase. "Growth rate" is just another way to say "I'm comparing with an exponential". Growth has accelerated, subexponentially.

Because you keep describing a rise as a fall. See above.

Because growth rates have fallen. See above.

That is not a good reason. The word "fall" does not mean "subexponential rise". Check a dictionary if you don't believe me, and then make a note of it.

Nothing to do with anyone's preferences. Nor does the reason for comparing rates have anything to with exponential growth.

It has everything to do with exponential growth. Production levels, like prices, are noisy fractals. To summarize what they do over an extended period with a single number is to approximate them

Yes

by discarding most of the information

No

No? How many bits do you think it takes to record a noisy fractal? How many bits do you think it takes to record an average growth rate?

and curve-fitting them to a math formula with one adjustable coefficient. When that single number is a "growth rate" instead of some other parameter, that's just another way to say "the math formula we chose to curve-fit them to was an exponential function". That's what the phrase "growth rate" means.

Which just means comparing growth rates is a somewhat inexact business; nothing to do with anyone's "arbitrary choice of a preferred measurement function".

Everything to do with an arbitrary choice of a preferred measurement function. For instance, if you curve-fit that same fractal to a parabola instead of to an exponential, you don't get a growth rate at all -- you get a second derivative -- an acceleration. A parabola curves up but an exponential curves up faster. Why should the exponential rather than the parabola get to define whether growth is rising? Other than that you prefer it because you prefer putting that spin on the numbers.

Right, so growth rates, while remaining positive, have fallen. As I said; as pretty much everyone says.

Had growth rates not fallen, the econony would have been absolutely bigger. That isn't anyone's "arbitrary choice of a preferred measurement function", it's simply true like 2 + 2 = 4 is true.

As would be true if growth rates had been falling (therefore subexponential) during my "preferred period" and subsequently fallen faster, or if zero growth had subsequently turned negative.

You appear to be missing the point. If you're right, then neoliberalism caused a 20% reduction in a quantity that repeatedly sees 300% [etc]

then you appear to be missing the point since growth rates certainly do not repeatedly see 300% jumps. If growth rate drops from 4% to 2%, you've lost half your growth, not half your output.

It's your bloody graph! Look at at! The growth rate jumped 300% between 1835 and 1875, and did it again between 1922 and 1942, and did it again between 1945 and 1973.

Yes, look at it! The 1945 -1973 jump, i.e. the post-war Keynesian era, comprises the highest ever growth rates, which are completely reversed during the subsequent neoliberal era.

(A 300% jump is a quadrupling of the growth rate, for instance from 0.6 to 2.4, the same way the drop from 2.5% to 2% that you're attributing to neoliberalism was a 20% drop.)

Nope, see below...

In any event, a lot of things happened in the world since your 1973 peak besides neoliberalism. If you need something to blame, um, how about OPEC massively raising the price of oil? How about first Japan and then the rest of East Asia getting good at making things people used to import from Britain? How about Britain getting paralyzed by strike after strike? I can't help but notice your chart showing the sudden significant inflection happened several years before Thatcher brought in all her nasty neoliberalism.

Yep a lot of things happened like North Sea oil, the end of the cold war, the IT revolution... It'd be hard to argue that it's down to a preponderance of exogenous shocks, and not even the staunchest defender of neoliberalism does.

So who did that? All those strikes were endogenous shocks.

All what strikes? Strikes fell off to the lowest levels on record (as has wage growth).

These strikes: http://www.nationalarchives.gov.uk/cabinetpapers/alevelstudies/1960-radicalisation.htm

..see below..

The end of the cold war was long after your inflection point. And, once again, so was neoliberalism. Your argument would be weak enough if it were post hoc ergo propter hoc, but you're trying to sell pre hoc ergo propter hoc. Effects do not precede their causes.

And no one's saying otherwise. The effect is the relatively weak growth of the neoliberal era.

No one's saying otherwise? I thought you were blaming neoliberalism for the weak growth. But according to your chart the growth suddenly started weakening six years before neoliberalism was adopted. The worst one can say about neoliberalism is that, whatever caused the weakening, neoliberalism was no more able to fix it than earlier attempts were.

..Not at all. Two of the most decisive changes in the transition from post-war Keynesianism to neoliberalism were

(1) the dismantling of the Bretton Woods system which had been designed to allow govts to pursue expansionary fiscal policy without getting into competitive devaluations and suchlike

(2) the ceding of key economic levers from govt fiscal policy to central bank monetary policy, along with the prioritisation by central banks of inflation targeting over full employment.

The theory was that expansionary fiscal policy "crowds out" private sector investment and that even higher growth rates could be realised by dialling it back and allowing financial markets free rein to allocate capital. Instead, we got housing and consumer-credit bubbles and falling productive investment.

Both of these key policy changes originate from the 1970s around the time growth rates started to fall and the 1% started to gain so conspicuously (after consistently losing income share during the Keynesian era). And both remain central planks of the neoliberal era - which we are still very much in.

And unlike the "The rich/poor gap has increased in nearly all countries" Gini charts people show, it's a graph of inequality based on data that wasn't cherry-picked.

It's from the same data.

What's your point? If you take data that shows inequality declining, and then you look at only the U.S. data and it shows inequality rising within the U.S., sure it's from the same data, but you cherry-picked it.

But it doesn't look "only at the US data", and I didn't pick it at all, cherry or otherwise.

Sorry, I guess I was unclear. If you look at the U.S. data and compare Americans with other Americans to show inequality rising within the U.S., and you also look at the British data and compare Britons with other Britons to show inequality rising within Britain, and you also look at the Thai data and compare Thais with other Thais to show inequality rising within Thailand, and you repeat that process for all 200 countries and thereby look at *all* the data, which is what you need to do to be able to say "The rich/poor gap has increased in nearly all countries", then that is cherry-picking. The choice to compare each country's people with others from within the same country, instead of comparing them with the whole world, is nothing but 200 separate acts of cherry-picking.

I've no idea why you think so. If you were looking at within-country inequality, then doing anything other than looking at "all 200 countries" would be cherry-picking. But that isn't even what the red line in question depicts.

Let me rephrase. If it's important to make poor Englishmen richer because that will increase growth rates, why isn't it even more important to make even poorer Chinese people richer? Won't that increase growth rates too? Or does that not help, because poorer Chinese people live so far away from rich Englishmen that the rich-poor gap is inconspicuous?

It's important that growth rates and aggregate demand are sustained. Outsourcing to relatively low wage/low productivity countries like China reduces both.

So does that principle apply within countries as well? If rich Britons trade with poor Britons instead of with middle-class Britons, raising the standard of living of the poor while the middle-class stagnates, does that reduce growth rates and aggregate demand too?

Not unless it diverts production from high productivity/high wage regions or workers to lower productivity/low wage regions or workers.

"Absolute Gini" is a goofy measure. (And a misnomer -- if Corrado Gini had anything whatsoever to do with that measure I'll be very surprised. Surely some lesser mind invented "Absolute Gini" and wanted to associate Gini's name with it to give it some cachet.) If we go from Bill making $20,000 and Joe making $100,000 to Bill making $100,000 and Joe making $200,000, their Gini index dropped a lot, reflecting that Bill is now making 1/3 of the income rather than only 1/6; but the "Absolute Gini" rose. And yet the changed situation is a massive improvement for the poorer man. To rely on the "absolute Gini" as an indication of the condition of the less fortunate in society is to treat the rising tide lifting all boats as a bad thing.

But not as massive as if the proportions had remained the same.

Say what? If the proportions had remained the same Bill would be making $50,000 while Joe was making $250,000. That's a lot less massive.

Yes, I meant to say not as massive as Joe's gains if the proportions had remained the same. And those differentials are absolute peanuts compared to the real ones.

The question then becomes under which kind of distribution does the tide rise highest. The neoliberal assumption - "Okun's Tradeoff" - was a growth vs inequality tradeoff, which certainly ain't been borne out by 40 years of neoliberalism.

How do you know?

That Okun's Tradeoff hasn't been borne out? Because growing absolute gaps between rich and poor turn out to be correlated with falling growth rates (of course I don't absolutely know it in the sense that any possible coincidental confounder has been ruled out, but that's an impossibly high bar).

How did you compute how high the tide would have been if neoliberalism had never been adopted?

See above. It'd depend on what causal mechanism(s) you ascribe the correlation, obviously. Even then I doubt you could "compute" precise counterfactual growth rates.