Wednesday, December 22, 2010
Monday, December 13, 2010
A friend asked me,
What is your take on if the U.S. dollar loses its reserve status as the world's reserve currency? In today's economic environment and the government's incessant use of QE, what are the chances of the U.S. losing this status, and if we do, what does that look like for the American people the next day when they wake up after it happens?
There are a few questions there. I may oversimplify too much, or too little, for some but let's take them one at a time.
Q. What will happen if the dollar is no longer the world's reserve currency?
A. Not much. Maybe interest rates on U.S. government bonds would be a little higher.
Why? Countries like China or oil-rich Arab states do not hold excess cash but buy Treasury bonds with their excess cash. (U.S. bonds do not pay much in interest but it is more than the zero return on holding cash.) If the foreign demand for U.S. Treasury bonds goes down then the federal government would have to pay a bit more in interest to sell its bonds.
The British pound was once the major reserve currency in the world and started losing ground to the U.S. dollar after WWII. Britain is doing just fine. Being a reserve currency is not a big deal. It just means there is a larger demand for government bonds which are denominated in the currency.
Q. If the dollar stops being the reserve currency, what would it look like the day after it happens?
A. It won't happen in a day. It would happen over years. It will not happen soon.
Individual countries decide how they hold their reserves. We see some diversifying their reserves now rather than holding everything in dollars. Putting all the eggs in one basket is not a good idea.
What would be the substitute for the U.S. dollar? The euro? The Chinese yuan? Well, the euro is the most likely alternative. However, given the financial crises in various European countries, no country would choose to load up on euros for their reserves right now. The yuan is not a convertible currency so it can not be used as a reserve currency yet.
Q. Will QE (quantitative easing) hasten the loss of reserve status.
A. In all likelihood, no.
There are several ideas and issues implicitly embedded in this question:
- First, if U.S. inflation is much worse than another countries, then the dollar is losing value faster than other currencies. This would tend to cause a flight out of dollars as countries would rather hold reserves in other currencies. (Even this might not happen if the interest rates on U.S. bonds were high enough to offset the expected higher inflation in the U.S.)
- Second, QE (quantitative easing) is the Federal Reserve System (a.k.a. the Fed) buying up government bonds in the open market. They create money by doing this, and more importantly, create the potential for even larger increases in the money supply as banks could create additional new money. (A very long, complicated story as to how and why. I'll spare you.)
- Third, a large increase in the money supply can set off inflation, thus QE may cause the U.S. dollar to look relatively unattractive as a reserve currency.
The money supply is not growing because so many banks are in trouble or afraid of getting into trouble. Banks are holding huge amounts of excess reserves -- funds in excess of what they have to hold to back up deposits -- funds they could loan out and create new money. Banks are not making loans, money is not being created. To give you some idea of the magnitude, a couple of years ago, in more normal times, commercial banks had $8 billion in excess reserves. Now they have well over $800 billion in excess reserves.
That is a lot of potential money creation that ain't happening. Something like this has not happened in the U.S. since the 1930's. If the fears of bankers subside and they start creating new money, the Fed can reverse QE by selling their holdings of Treasury bonds and reducing the excess reserves.
A similar QE happened during a banking crisis in Sweden during the 1990's. When normalcy started to return the Sveriges Riksbank, the Swedish version of the Fed, put QE in reverse and wound the whole thing down without inflation.
Finally, inflation is low. Inflation is below the Fed's target rate of 2%. Yes, some commodity prices are rising but that is due to the increased demand from China and other emerging economies that have expanding economies right now.
Is anyone still with me?
There are a lot more scarier things out there than the dollar not being the world's reserve currency. And even if there are:
"Peace I [Jesus] leave with you; my peace I give you. I do not give to you as the world gives. Do not let your hearts be troubled and do not be afraid" (John 14:27, NIV).
Posted by RB at 5:48 PM
Thursday, December 9, 2010
Eight days of the Festival of Lights (Chanukah, Hanukkah, or whatever) is ending so I offer these four items:
#1 The principles of economics explanation of the miracle of Chanukah
[HT: him | Source ]
#2 The Econ Chanukah Song
(With Apologies to Adam Sandler)
[Source: the original post on December 4, 2007]
Put on your yarmulke
Here comes Chanukah
Lots of Economica
Chanukah is the festival of lights
Avoid diminishing returns with eight crazy nights
When you feel like the only kid in town without Christmas utility
Here’s a list of economists who are jewish just like you and me
Paul Samuelson lights the menorah in the evenin’
So do Solow, Stiglitz and the late Milton Friedman
Guess who eats together at the Fed reserve deli
Alan Greenspan and Chairman Ben Bernanke
Akerlof’s part jewish, Herb Simon’s part too
Bundle them together, what a fine econ jew
You don’t need jingle bell or a yule log
cause you can spin a dreidel at the Becker/ Posner blog- both jewish
Put on your yarmulke
It's time for Chanukah
the author of Freakonomikah
Robert Mugabe, not a jew! Or an economist!
But guess who is? Nobel prize winners Ken Arrow and Simon Kuznets too
We got Herb Stein and his son’s Ben’s money
David Ricardo was born jewish- but went Quaker for his honey
Some people know that Paul Krugman is
He hasn’t won a Nobel prize
but three others did --- This YEAR!
So many jews are econ wiz kids
Greg Mankiw isn’t, but I heard his book agent is
So study your Economica
It's time to celebrate chanukah
I hope I get published in Econometrikah
Oh this lovely, lovely chanukah
So find your equilibriah
And check your heteroskedisticas
If you really, really wannakah
Have a happy, happy, happy, happy chanukah
#3 Jewish Economists: the list
#4 Jewish Nobel Prize Winners in Economics: the list
(42% of world total, 55% of US total)
Posted by RB at 11:01 AM
Friday, November 26, 2010
Thursday, November 25, 2010
Wednesday, November 24, 2010
Despite the protestations of some acquaintances who were once in investment banking, this is going to be a long and slow recovery. The Fed's efforts (QE2) to lower mid- and long-term interest rates, even if successful, will have limited impact.
Increased housing construction has historically been important in recoveries from recessions. It won't be this time. It won't be even if mortgage interest rates fall.
Historically, housing construction is the most interest-rate-sensitive component of spending in the economy, but not this time. The housing construction boom of a few years ago left us with a lot of houses. Speculation and low lending standards led to a lot more than the usual number of new houses being built. Now we are stuck with the surplus. Since houses wear out rather slowly, we'll be stuck for a long time.
The first chart with the blue bars shows how the inventory of unsold houses has skyrocketed from the early part of the past decade.
The second chart's red line puts the existing housing inventory in terms of the number of months it would take to sell them. 11 to 12 months of inventory is a lot. This is not a good sign.
Even if the houses sold, we would still have an awful lot of houses selling at low prices. Prices that will stay low for years. Lowering mortgage rates won't cause people to desire to pay for new houses if the supply of existing houses is large.
A Policy Proposal. What can the government do? A three-step process: 1) Speed up foreclosures; 2) have the Fed buy up about eight or nine months of the inventory of unsold houses; and 3) then burn those houses to the ground.
A modest proposal, yes?
Without that happening, don't expect a quick rebound from the Great Recession.
[ Source for charts]
Posted by RB at 2:35 AM
Tuesday, November 23, 2010
Monday, November 22, 2010
Here is a presentation by Zambian author Dambisa Moyo and followed by comments by Todd Moss. Next semester I am teaching African Economies (Economics/African Studies 228). Among the books I am using are Moyo's Dead Aid and Moss's African Development. [Warning: Moss's comments may seem a bit more academic.]
[RB's textbooks for Spring '11]
Posted by RB at 9:53 AM
Tuesday, November 16, 2010
Thursday, November 11, 2010
I am a student of economic growth and development. In last Saturday's issue of the Wall Street Journal Scott Adams, creator of the cartoon Dilbert, had a column outlining an important key to economic progress heretofore unnoticed: hamster-brained sociopath bosses.
The Wall Street Journal
November 6, 2010, p. C3
The Perfect Stimulus: Bad Management
If no one had a hamster-brained sociopath for a boss, who would start new businesses?
By SCOTT ADAMS
One of my earliest childhood jobs involved shoveling manure at my uncle's dairy farm in upstate New York. Things were going well until my uncle explained that no matter how well I performed, I would never be promoted to farmer. Or even cow. I had hit the manure ceiling.
I consider that experience my first economic stimulus package—the unwelcome realization that my current job was a dead end. While my classmates were building snowmen with carrot noses (mostly the girls) and carrot genitalia (mostly the boys), I started to do some serious career planning about how to get out of the fecal relocation profession and into the warm embrace of a loving corporation. I studied hard, and I earned money for college by mowing lawns, shoveling snow, shoveling even more manure, and (my personal favorite) shoveling frozen manure covered with snow. I saved my meager funds, and with the help of my parents, who both took extra jobs, plus a few scholarships, I clawed my way into college.
Years later, my dream came true. I got a job with a large bank, and I never again needed to shovel manure. Corporations use something called PowerPoint instead. Thanks to my farm training, I was so good at designing PowerPoint slides that my coworkers called me "The Natural." Jaws dropped when I introduced my signature move: the frozen PowerPoint slide with snow on top.
In those days, I was a furious bundle of ambition and determination. The old-timers told me I had a "rocket strapped to my ass." All I needed to do was get my "ticket punched." It wasn't long before I was able to enjoy my second economic stimulus package: bad management.
Though most of my immediate bosses were entirely reasonable and competent, the organization at large was riddled with hamster-brained sociopaths in leadership roles. Surely, I thought, this must be a problem that exists no place else on Earth. Otherwise we'd all be living in caves and holding long meetings on the feasibility of using sticks as stabby things.
One day, a position opened above me, and I was the most obvious candidate to fill it. My boss called me into her office and said she had some bad news. She explained that the media was giving our company a lot of heat because almost all of our managers and executives were white males. Promoting me, she explained, would only make things worse. I asked how long I might need to wait for all of this to blow over. My boss was vague, but she said the timeline involved smoothing out the effects of two centuries of corporate discrimination.
I decided to jump ship and go where my talent and hard work would be rewarded. I took a job at the local phone company and soon discovered, to my horror, that banking was not the only industry in the world managed by hamster-brained sociopaths. Once again, my immediate bosses were quite capable, but interacting with other departments was like being the last human in Zombieville and trying to buy groceries at dusk. Still, it was marginally better than shoveling manure, so I doubled down. I finished my MBA classes at night and distinguished myself as an up-and-comer. One day my boss called me into his office and explained that the media was giving the phone company a lot of heat because almost all of the managers and executives were white males. So, he explained, promoting me would only make things worse. You might say that was the day that the "Dilbert" comic strip was born, although I had not yet drawn one. Let's call it a tipping point. From that day on, I considered myself an entrepreneur. All I had to do was figure out what business I was in. The phone company was willing to pay for almost any sort of semi-relevant training or education that I was willing to endure. It was like an accidental school for entrepreneurs. From an economic viewpoint, I was in exactly the right place, with exactly the right amount of career discomfort.
I wasn't suffering alone. Many of my co-workers already had active side businesses and ambitious expansion plans. The guy in the cubicle behind me was running a concert equipment rental business. Across from me was a guy running a computer tech support business. We had Amway dealers, Mary Kay sales people, inventors, authors and just about any other business you can imagine. That's not counting all of the business plans in the incubation phase. I think we all understood that working in a cubicle and being managed by Satan's learning-challenged little brother was not a recipe for happiness.
The way I describe it may sound pessimistic, but consider the alternative. Imagine a parallel universe where employees enjoy going to work. They feel empowered and fulfilled—so much so that they don't care about the size of their paychecks and never want to leave their jobs. That's exactly the sort of nightmare scenario that would destroy the economy. The last thing this world needs is a bunch of dopey-happy workers who can't stop humming and grinning. Our system requires a continuous supply of highly capable people who are so disgruntled with their jobs that they are willing to chew off their own arms to escape their bosses. The economy needs hamster-brained sociopaths in management to drive down the opportunity cost of entrepreneurship. Luckily, we're blessed with an ample supply.
To put it in plainer terms: The primary purpose of management is to kill any hope that staying in your current job will work out for you. That sort of hope is like gravel in the engine of progress. The economy needs workers who are fed up, desperate and willing to quit their jobs for something better. Remember, only quitters can be winners, because you can't do something great until first you quit doing something that isn't.
You see this same dynamic with countries. The United States is a nation founded by people who couldn't stand the leaders of their old homelands. I'm no geneticist, but I suspect that the "screw it, I'm out of here" attitude can get passed on. We're probably the most disgruntled, self-loathing, hard-to-satisfy people on Earth. It's no wonder our GDP is awesome.
Israel is another perfect example. The entire nation is full of people who were displeased with their last situation. And Israel's economy is one of the most vibrant in the world. If every Israeli became satisfied at once, they couldn't keep the lights on for a week.
I have always assumed there's a correlation between imagination and risk-taking. You wouldn't leave an unpleasant but relatively safe situation unless you could imagine a better outcome. So the people who leave a company first tend to be the visionaries who can best imagine entrepreneurial success. The last wave of people who leave are usually excreted just before the door is chained. They didn't imagine it would happen so soon. Bad management is how imagination gets wings.
—Scott Adams is the creator of 'Dilbert.'
Posted by RB at 12:08 PM
Friday, October 15, 2010
RB spent Thursday through Sunday in New Hampshire hanging out with his three-month-old grandson. They spent a lot of time laughing and discussing world events.
William is about the happiest, best-natured baby RB has ever seen.
Like most babies William is attracted to colorful objects. However, when RB showed his grandson a plain gray remote control, William's eyes locked on it. There was nothing to attract him except a deep, primordial, abiding desire to be one with the remote.
This intensity clearly indicates that William is indeed a great manly man child.
Later William spent a long time laying on this grandpa's lap where they held a lengthy conversation speaking in unknown tongues. They had a great time giggling and laughing in the joy of the Lord.
Obviously, this baby is also a great manly man child spiritually.
We can only conclude that even at three months old, he is a totally awesome guy.
Posted by RB at 11:51 AM
Sunday, October 3, 2010
Why Some Islanders Build Better Crab Trapsby Matt Ridley
The Wall Street Journal (Saturday 2 October 2010, p. C4)
By contrast, it's a fair bet that if you took a few million rabbits and let them loose on Manhattan island, they would starve, fight, sicken and generally peter out. Whether you like it or not, whether you think it can continue forever or not, you cannot deny that when people come together in dense swarms, they often get richer.
In this fact lies a vital clue to the nature of the human animal, one that has until recently been overlooked: namely, that what explains the sudden success of the human species over the past 200,000 years is not some breakthrough in individual ability, but rather the cumulative effects of collective enterprise, achieved through trade. A new study of fishing tackle in the South Pacific provides intriguing support for this notion.
Two anthropologists, Michelle Kline and Rob Boyd, collected information on the "marine foraging technology" used by native people in 10 different groups of Pacific islands at the time of Western contact. They assigned scores not only for the number of tools but also for their complexity. A stick for prying clams from the reef, for example, counted as one techno-unit, whereas a bamboo crab trap with a baited lever counted as 16, because it comprised 16 working parts, each a technology in its own right.
What they found was that the bigger the population, the more varied and more complex the tool kit was. Hawaii, with 275,000 people at the time of Western contact, had seven times the number and twice the complexity of fishing tools as tiny Malekula, with 1,100 people.
But it's not just the size of the population on the island group that matters, but the size of the population it was in contact with. Some small populations with lots of long-distance trading contacts had disproportionately sophisticated tool kits, whereas some large but isolated populations had simple tool kits. The well-connected Micronesian island group of Yap had 43 tools, with a mean of five techno-units per tool, while the remote Santa Cruz group in the Solomon Islands, despite having almost as large a population, had just 24 tools and four techno-units.
Mr. Boyd and his colleague Joe Henrich think that cultural change happens when one person learns a specialized skill and teaches it to others. But if others are poor learners or the teacher dies young, there is a tendency for skills to fade, creating a "treadmill of cultural loss," especially in small and isolated societies. Tasmania, for example, suffered a progressive simplification of its technology after its people were isolated by rising sea levels 10,000 years ago.
This tendency is counteracted by the sporadic innovation of expert specialists. Their ideas, embodied in technology, spread by trade and imitation. The greater the population and the connectedness between populations, the greater the pool of innovators to draw upon.
Archeologists suggest that the ephemeral appearances of fancy tool kits in parts of southern Africa as far back as 80,000 years ago does not indicate sudden outbreaks of intelligence, forethought, language, imagination or anything else within the skull, but simply has a demographic cause: more people, more skills.
Technology is more than just a barometer of human collaboration. It is the embodiment of human collective intelligence. Most of the technologies we use, as the economist Friedrich Hayek first observed, are things that nobody knows how to make from scratch. Humans have transcended the limits of their own brain power by combining their brains into networks.
Thanks to the Internet, the islands of humanity are now connected as never before, with only a few remote atolls like North Korea and Burma still holding out. So we can draw upon the inventiveness of a network of more than six billion people.
Posted by RB at 5:29 PM
Saturday, October 2, 2010
Last Saturday was the first game of the year for the Tuck (School of Business at Dartmouth) rugby team. It was also Captain Kenny's first rugby game ever. (That's him in the middle.) After falling behind, Tuck eventually won 17-10 over Yale Graduate School. For more....
Posted by RB at 5:38 PM
Saturday, September 4, 2010
Check out the chart I found (click chart for a larger image). It looks at employment changes in different recessions. There are problems with comparing labor markets from different time periods. However, these problems are minimized by looking at a) employment (unemployment numbers can get funky) and b) percentage losses in jobs (this sort of normalizes the data).
You can see why the recent downturn was nicknamed the Great Recession.
There are too many problems with the unemployment rate for it to be very useful. In a downturn the unemployment rate understates unemployment. This understatement is even worse in a severe downturn like the recent Great Recession.
If you can put up with a bit of an explanation as to why, I'll show you some numbers that give a better picture of how bad things are.
A person is only classified as "unemployed" if that person a) did not work for one hour or more for pay in the week previous to the survey and b) also actively sought employment.
[NOTE: This definition of unemployment has absolutely nothing to do with whether someone is eligible for unemployment benefits.]
This overlooks some people like part-timer workers who lost full-time jobs or desire full-time jobs. In a sense they are only partially employed and therefore are also partially unemployed. The unemployment stats make no allowance for these folks.
If someone gives up looking for work (the so-called discouraged worker), or is otherwise able and willing to work but didn't look for a job, then this person is not counted as unemployed. Most would consider people like this as part of the labor force but they are not counted as such.
Now let's see how this biases the numbers.
The published unemployment rate for August 2010 is 9.6%. (BTW, 5.5 of this 9.6, a majority of the official unemployed, have been unemployed for 15 weeks or more. This is quite high but still doesn't get at the severity of the problem.)
If you include all people who are out of work but willing and able to work, whether actively looking for a job or not, the unemployment rate would climb to 11.0%.
If you also include those who took part-time rather than full-time jobs for economic reasons, then the unemployment rate would jump to 16.7%.
9.6% vs. 16.7%. A more reasonable statistic of unemployment would be over 7 percent points higher. In a sense this means unemployment may be 74% higher than the official rate indicates.
It ain't even close.
[source of statistics]
Posted by RB at 3:09 PM
Thursday, September 2, 2010
This may well be the last of MissBeee's posts on our China trip:
Lazy Lijiang Days.
Previous posts on our 2010 China trip:
a great wall day
aggregated post on china trip
aggregated china post #2
stealing from the best -- aggregated china posts #3
someone's grandparents went to china
Posted by RB at 2:30 PM
Saturday, August 28, 2010
I'm "aggregating" posts again. Three posts are a continuation of MissBeee's series about our China trip. She has some great pics:
1) Xi'an: Er.
2) Going South.
3) Tiger Leaping Gorge.
Plus another post from Mrs. B. about last weekend in NH:
A month of this and that.....
The pic above is at the guesthouse in Lijiang.
Earlier posts about our trip to China:
a great wall day
aggregated post on china trip
someone's grandparents went to china
aggregated china post #2
Posted by RB at 4:44 PM
Tuesday, August 17, 2010
This is a follow-up to a recent post on birthright citizenship. The 14th Amendment clearly gives citizenship to a child born in the United States. This right does not depend on the legal status of the parents. The courts have a 100+ year record of consistently upholding this right.
Why debate whether babies of illegal aliens born here should have citizenship? It is a settled issue with the courts. This constitutional right to citizenship cannot be changed with legislation. Only an amendment to the Constitution can change it.
Such an amendment to the Constitution will not happen.
So why have the debate? What is the point?
The point is for so-called conservatives in the GOP to curry favor with angry white voters already voting for the GOP. The point is for the GOP to permanently lose socially-conservative Hispanic voters to the Democrats. This is in not in the interest of the conservative movement but is in the interest of individuals going after the angry white-guy vote.
Time to move on.
RB's related posts:
gop out for a generation?
Posted by RB at 12:09 PM
Sunday, August 15, 2010
Animal and human behaviour
Manager's best friend:
Dogs improve office productivity
Aug 12th 2010
THERE are plenty of studies which show that dogs act as social catalysts, helping their owners forge intimate, long-term relationships with other people. But does that apply in the workplace? Christopher Honts and his colleagues at Central Michigan University in Mount Pleasant were surprised to find that there was not much research on this question, and decided to put that right. They wondered in particular if the mere presence of a canine in the office might make people collaborate more effectively. And, as they told a meeting of the International Society for Human Ethology in Madison, Wisconsin, on August 2nd, they found that it could. To reach this conclusion, they carried out two experiments. In the first, they brought together 12 groups of four individuals and told each group to come up with a 15-second advertisement for a made-up product. Everyone was asked to contribute ideas for the ad, but ultimately the group had to decide on only one. Anyone familiar with the modern “collaborative” office environment will know that that is a challenge. Some of the groups had a dog underfoot throughout, while the others had none. After the task, all the volunteers had to answer a questionnaire on how they felt about working with the other—human—members of the team. Mr Honts found that those who had had a dog to slobber and pounce on them ranked their team-mates more highly on measures of trust, team cohesion and intimacy than those who had not. In the other experiment, which used 13 groups, the researchers explored how the presence of an animal altered players’ behaviour in a game known as the prisoner’s dilemma. In the version of this game played by the volunteers, all four members of each group had been “charged” with a crime. Individually, they could choose (without being able to talk to the others) either to snitch on their team-mates or to stand by them. Each individual’s decision affected the outcomes for the other three as well as for himself in a way that was explained in advance. The lightest putative sentence would be given to someone who chose to snitch while the other three did not; the heaviest penalty would be borne by a lone non-snitch. The second-best outcome came when all four decided not to snitch. And so on. Having a dog around made volunteers 30% less likely to snitch than those who played without one. The moral, then: more dogs in offices and fewer in police stations.
Posted by RB at 9:27 PM
Saturday, August 14, 2010
The Wall Street Journal
OPINION | AUGUST 11, 2010
The Case For Birthright Citizenship
Since the abolition of slavery, we have never denied citizenship to any group of children born in the U.S. Why change now?
By LINDA CHAVEZ
Republican leaders in Congress are now flirting with changing portions of the 14th Amendment—which grants citizenship to "all persons born or naturalized in the United States and subject to the jurisdiction thereof"—to deny citizenship to children born here to illegal immigrants.
The idea of modifying birthright citizenship has been around for decades but was previously relegated to the fringes of the immigration restriction movement. Yet in recent days, Sens. John McCain, Lindsey Graham and Jon Kyl have embraced the idea; Senate and House GOP leaders Mitch McConnell and John Boehner have proposed hearings.
Repealing birthright citizenship is a terrible idea. It will unquestionably jeopardize the electoral future of the GOP by alienating Hispanics—the largest minority and fastest-growing segment of the U.S. population. More importantly, ending birthright citizenship would fundamentally change what it means to be an American.
Proponents of repeal argue that the 14th Amendment was passed after the Civil War to guarantee citizenship to freed slaves, and that it was never intended to grant rights to the offspring of illegal aliens. But this argument is a non sequitur. At the time of the adoption of the amendment, there was no category of "illegal alien" because immigration was unrestricted and unregulated. If you secured passage to the United States, or simply walked across the open border with Mexico or Canada, you could stay permanently as a resident alien or apply to be naturalized after a certain number of years. And if you happened to give birth while still an alien, your child was automatically a citizen—a right dating back to English common law.
The most serious challenge to birthright citizenship for the children of aliens came in 1898, and it involved a class of aliens who were every bit as unpopular as present-day illegal immigrants: the Chinese. Like most illegal immigrants today, the Chinese came here to work as common laborers, eagerly recruited by employers but often deeply resented by the workers with whom they competed. This popular resentment, coupled with racial prejudice, led to America's first immigration restriction law, the Chinese Exclusion Act of 1882. It was followed by successively more restrictive federal and state laws that denied Chinese aliens—and, later, other Asians—the right to own property, to marry, to return to the U.S. if they left, or to become American citizens.
With anti-Chinese alien sentiment still high, the Supreme Court took up the case U.S. v. Wong Kim Ark in 1898. Born in San Francisco to alien parents who later returned to China, Wong travelled to his parents' homeland for a visit and was denied re-entry on his return in 1895. The government argued that Wong had no right to birthright citizenship under the 14th Amendment because his parents remained "subjects of the emperor of China" not subject to U.S. jurisdiction, even while residing in California at the time of his birth. In a 7-2 vote, the Supreme Court ruled otherwise.
The court found that the only persons Congress intended to exclude from birthright citizenship under the 14th Amendment were children born to diplomats—an ancient, universally recognized exception even under common law; Indians, who by treaty were considered members of sovereign nations; and children of an occupying enemy. "The amendment, in clear words and in manifest intent, includes the children born within the territory of the United States of all other persons, of whatever race or color, domiciled within the United States," wrote Justice Horace Gray for the majority. To hold otherwise, he noted, would be to deny citizenship to the descendants of English, Irish, Germans and other aliens who had always been considered citizens even if their parents were citizens of other countries. For more than a 100 years, the court has consistently upheld this analysis.
Our history has been largely one of continuously expanding the community of people regarded as Americans, from native-born whites to freed slaves to Indians to naturalized citizens of all races and ethnicities. Since the abolition of slavery, we have never denied citizenship to any group of children born in the U.S.—even when we denied citizenship to their parents, as we did Asian immigrants from 1882 to 1943. This expansive view of who is an American has been critical to our successful assimilation of millions of newcomers.
Conservatives should not betray these values based on a misreading of American history and legal precedent. Instead of amending the Constitution to eliminate "anchor babies"—the ugly term opponents of birthright citizenship use to describe these U.S. citizens—Republicans should be helping them become good Americans.
Ms. Chavez is chairman of the Center for Equal Opportunity in Falls Church, Va. and was director of public liaison in the Reagan White House.
RB's related posts:
gop out for a generation?
Posted by RB at 8:59 PM
Wednesday, August 11, 2010
Tonight, August 11th, forty years later, RB took this same attractive, non-short woman out for enchiladas. If memory serves me correct, The Cactus Grill is better than dorm food.
Posted by RB at 10:59 PM
Friday, August 6, 2010
Sunday, August 1, 2010
Monday, July 26, 2010
From today's Wall Street Journal
Ten Stock Market Myths That Just Won't Die
By BRETT ARENDS
The Dow Jones Industrial Average last week ended up pretty much where it had been a little more than a week earlier. A rousing 200-point rally on Wednesday mostly made up for the distressing 200-point selloff of the previous Friday.
The Dow plummeted nearly 800 points a few weeks ago -- and then just as dramatically rocketed back up again. The widely watched market indicator is down 7% from where it stood in April and up 59% from where it was at its 2009 nadir.
These kinds of stomach-churning swings are testing investors' nerves once again. You may already feel shattered from the events of 2008-2009. Since the Greek debt crisis in the spring, turmoil has been back in the markets.
At times like this, your broker or financial adviser may offer words of wisdom or advice. There are standard calming phrases you will hear over and over again. But how true are they? Here are 10 that need extra scrutiny.
1 "This is a good time to invest in the stock market."
Really? Ask your broker when he warned clients that it was a bad time to invest. October 2007? February 2000? A broken watch tells the right time twice a day, but that's no reason to wear one. Or as someone once said, asking a broker if this is a good time to invest in the stock market is like asking a barber if you need a haircut. "Certainly, sir -- step this way!"
2 "Stocks on average make you about 10% a year."
Stop right there. This is based on some past history -- stretching back to the 1800s -- and it's full of holes.
About three of those percentage points were only from inflation. The other 7% may not be reliable either. The data from the 19th century are suspect; the global picture from the 20th century is complex. Experts suggest 5% may be more typical. And stocks only produce average returns if you buy them at average valuations. If you buy them when they're expensive, you do a lot worse.
3 "Our economists are forecasting..."
Hold it. Ask your broker if the firm's economist predicted the most recent recession -- and if so, when.
The record for economic forecasts is not impressive. Even into 2008 many economists were still denying that a recession was on the way. The usual shtick is to predict "a slowdown, but not a recession." That way they have an escape clause, no matter what happens. Warren Buffett once said forecasters made fortune tellers look good.
4 "Investing in the stock market lets you participate in the growth of the economy."
Tell that to the Japanese. Since 1989 their economy has grown by more than a quarter, but the stock market is down more than three quarters. Or tell that to anyone who invested in Wall Street a decade ago. And such instances aren't as rare as you've been told. In 1969, the U.S. gross domestic product was about $1 trillion, and the Dow Jones Industrial Average was at about 1000. Thirteen years later, the U.S. economy had grown to $3.3 trillion. The Dow? About 1000.
5 "If you want to earn higher returns, you have to take more risk."
This must come as a surprise to Mr. Buffett, who prefers investing in boring companies and boring industries. Over the last quarter century, the FactSet Research utilities index has even outperformed the exciting, "risky" Nasdaq Composite index. The only way to earn higher returns is to buy stocks cheap in relation to their future cash flows. As for "risk," your broker probably thinks that's "volatility," which typically just means price ups and downs. But you and your Aunt Sally know that risk is really the possibility of losing principal.
6 "The market's really cheap right now. The P/E is only about 13."
The widely quoted price/earnings (PE) ratio, which compares share prices to annual after-tax earnings, can be misleading. That's because earnings are so volatile -- they're elevated in a boom, and depressed in a bust.
Ask your broker about other valuation metrics, like the dividend yield, which looks at the dividends you get for each dollar of investment; or the cyclically adjusted PE ratio, which compares share prices to earnings over the past 10 years; or "Tobin's q," which compares share prices to the actual replacement cost of company assets. No metric is perfect, but these three have good track records. Right now all three say the stock market's pretty expensive, not cheap.
7 "You can't time the market."
This hoary old chestnut keeps the clients fully invested. Certainly it's a fool's errand to try to catch the market's twists and turns. But that doesn't mean you have to suspend judgment about overall valuations.
If you invest in shares when they're cheap compared to cash flows and assets -- typically this happens when everyone else is gloomy -- you will usually do very well.
If you invest when shares are very expensive -- such as when everyone else is absurdly bullish -- you will probably do badly.
8 "We recommend a diversified portfolio of mutual funds."
If your broker means you should diversify across things like cash, bonds, stocks, alternative strategies, commodities and precious metals, then that's good advice.
But too many brokers mean mutual funds with different names and "styles" like large-cap value, small-cap growth, midcap blend, international small-cap value, and so on. These are marketing gimmicks. There is, for example, no such thing as "midcap blend." These funds are typically 100% invested all the time, and all in stocks. In this global economy even "international" offers less diversification than it did, because everything's getting tied together.
9 "This is a stock picker's market."
What? Every market seems to be defined as a "stock picker's market," yet for most people the lion's share of investment returns -- for good or ill -- has typically come from the asset classes (see No. 8, above) they've chosen rather than the individual investments. And even if this does turn out to be a stock picker's market, what makes you think your broker is the stock picker in question?
10 "Stocks outperform over the long term."
Define the long term? If you can be down for 10 or more years, exactly how much help is that? As John Maynard Keynes, the economist, once said: "In the long run we are all dead."
Posted by RB at 10:03 PM
Sunday, July 25, 2010
Wednesday, July 21, 2010
Today #2 son took me to a place I have long wanted to visit: The Muhammad Ali Center. This multi-story museum is in downtown Louisville and overlooks the Ohio River.
My dad was a boxing fan so I watched a lot of fights on TV when I grew up. I was in grade school when Cassius Clay, as Ali was known, turned pro. My earliest memory of Ali is from before he was champ, a press conference where he and the fifty-year-old Archie Moore were promoting their upcoming fight - a fight that everyone knew, except for me, was less of a fight than a publicity stunt for Ali and just a paycheck for the once-great Moore.
I loved the brash, always confident, loud-mouthed Ali with his humorous poems declaring his greatness, the futility of trying to beat him, and what would happen to anyone who tried. No one ever acted like that in sports before. I was too young and naive to appreciate just how revolutionary it was that it was an African-American doing it.
Ali was fast, unusual for a heavyweight, and fun to watch fight. After he beat Liston to become world champ, just about all his fights seemed to be televised on ABC's Wide World of Sports. Ali fought everyone. There was no one who came close to him in the 1960's. I realize now that was why he was on TV so much: No big gates for a one-sided fight. He even traveled to Europe to try to make some money by fighting out-ranked boxers on their home turf.
I never understood his treatment, the hostility, the stripping him of his crown, when he made the courageous and principled decision to refuse induction into the military.
He was the greatest. I had no other sports heroes. I loved the Dodgers, but even their great players were not my heroes. Most kids want to grow up and do what their heroes did. Not me. God did not bless me with the the needed upper-body strength. Even at a young age I never had any illusions of someday being a boxer.
Ali has always been amazing and surprising. He is The Greatest.
Posted by RB at 6:36 PM
Tuesday, July 20, 2010
2) RB and his co-pilot.
3) Getting in was not easy for someone RB's size.
4) Baptist Hospital East on the approach to Bowman Field.
5) We didn't lose a single passenger, however both our passengers were married.
Adam asked me if I wanted to take her in for the landing. He did mention he needed some practice because he wanted to get the hang of landing a bit better, so I said he could take over.
How else is he going to learn?
I was probably at the controls for twenty to twenty-five minutes.
It was cool. Very cool. A real adrenaline rush.
Below is a 5 1/2 minute video Capt. Kenny took from the back seat of the Cessna. It is actually kind of boring to watch, deadly to listen to, but here are some highlights:
- 1:29 Louisville International Airport.
- 2:22 Churchill Downs, site of the Kentucky Derby.
- 4:45 Mrs. B. during one of her calmer moments.
- 5:13 University of Louisville.
- 5:21 Downtown Louisville.
Posted by RB at 10:32 PM
Sunday, July 18, 2010
#2 son and I were running errands when we stopped by Borders to see if they had any boxes for packing. He cleaned up with 20+ sturdy book boxes.
While waiting I noticed a very large and very nice coffee-table type book on China was on clearance. When I went to purchase it, I was offered a free Borders reward card. I said no thanks and then she mentioned that it came with $5 off my next purchase.
My quick-as-thunder mind kicked in and I asked, "You mean if I buy one of these first (pointing to some chocolates near the cash register) can I get a rewards card then use it to get $5 off the book today?" Her nod in the affirmative was notable for its absence of enthusiasm.
The book was practically a give away at $8.47 (including tax). I ended up paying a total of $3.69 for the book plus a Lindt chocolate was thrown into the deal.
Not bad: 56% off an already rock-bottom price including some very fine chocolate!
I couldn't wait to get back and tell Mrs. B. Needless to say, she was impressed with her man. Mrs. B. is a real coupon-clipping maven who makes any sales clerk regret showing up for work if she does not get the sale price plus multiple coupon discounts. No errors are allowed and it does not matter how long it takes, or how many people are involved, to straighten out a five-cent mistake.
With me, I'm being cheap. With her, it is a matter of principle.
Posted by RB at 6:00 PM
Saturday, July 17, 2010
Friday, July 16, 2010
The first of our Blewett ancestors in America was also named William (born 1706 in Cornwall County, England and died 1790 in Anson County, North Carolina):
William Blewett, Esq. was transported from England to the colonies when about ten years old for the trivial offense of cutting a riding switch off a nobleman's land. He was brought up in Philadelphia City in the tailor trade. From there removed to North Carolina on the Pee Dee River, which is on the line between Anson and Richmond Counties, when a young man. [He settled] on land granted to him by King George the Second and King George the Third of England. William Blewett was a Justice of the Peace for Anson County, NC in 1776. [source].
The latest Will arrived home with mom and dad this afternoon. All are doing well.
Posted by RB at 5:10 PM
Thursday, July 15, 2010
At the moment of this posting, three generations of Blewett guys are hanging out together in a room at Louisville Kentucky's Baptist Hospital East. The youngest, #1 grandson (#2 grandchild), was born here at 9:59 p.m. on Wednesday 14 July. He came in at, or rather came out at, 8 lb. 3.7 oz. and 21.5 inches.
Posted by RB at 8:47 PM
Saturday, July 10, 2010
Has this ever happened to you?
This is especially cool if you've been there. Otherwise watch it and save a trip:
An obnoxious, but honest, commercial....
LINK: If God Had Texted the 10 commandments.
A pictorial critical review of the book Twilight:
Posted by RB at 4:54 AM
Friday, July 9, 2010
RB hasn't posted much on the trip to China.
However, for the past week Mrs. B has.
So why shouldn't RB free ride?
Excuse me. This is not free-riding. RB is merely a techno-savvy aggregator.
[Mrs. B thinks the above sign was designed especially for RB.]
2) The Forbidden City
3) Jingshan Park
4) The Great Wall
5) Summer Palace
6) Beijing Olympic Site
7) Temple of Heaven
Posted by RB at 11:19 AM
Thursday, July 8, 2010
Manute Bol's Radical Christianity
By JON A. SHIELDS
As any churchgoer who tuned in to watch the recent NBA finals contest between the Lakers and Celtics already knows, the term redemption is probably now heard more often in NBA sports broadcasts than in homilies. A Google search under "redemption" and "NBA" generates approximately 2 million hits—more hits than "redemption" and "Christianity." The term can also be found in more than 2,600 stories on ESPN.com.
What does redemption mean in the world of professional basketball and sports more broadly? It involves making up for—or, yes, "atoning"—for a poor performance. When the Lakers beat Boston, for instance, Bill Plaschke of the Los Angeles Times called the victory "redemption for the Celtics' 2008 Finals beating."
More often, though, sports journalists use the term to praise the individual performances of NBA superstars. Thus, the Associated Press reported that Kobe Bryant "found redemption" after he won a title in 2009 without the aid of his nemesis and former teammate Shaquille O'Neal.
Manute Bol, who died last week at the age of 47, is one player who never achieved redemption in the eyes of sports journalists. His life embodied an older, Christian conception of redemption that has been badly obscured by its current usage.
Bol, a Christian Sudanese immigrant, believed his life was a gift from God to be used in the service of others. As he put it to Sports Illustrated in 2004: "God guided me to America and gave me a good job. But he also gave me a heart so I would look back."
He was not blessed, however, with great athletic gifts. As a center for the Washington Bullets, Bol was more spectacle than superstar. At 7 feet, 7 inches tall and 225 pounds, he was both the tallest and thinnest player in the league. He averaged a mere 2.6 points per game over the course of his career, though he was a successful shot blocker given that he towered over most NBA players.
Bol reportedly gave most of his fortune, estimated at $6 million, to aid Sudanese refugees. As one twitter feed aptly put it: "Most NBA cats go broke on cars, jewelry & groupies. Manute Bol went broke building hospitals."
When his fortune dried up, Bol raised more money for charity by doing what most athletes would find humiliating: He turned himself into a humorous spectacle. Bol was hired, for example, as a horse jockey, hockey player and celebrity boxer. Some Americans simply found amusement in the absurdity of him on a horse or skates. And who could deny the comic potential of Bol boxing William "the Refrigerator" Perry, the 335-pound former defensive linemen of the Chicago Bears?
Bol agreed to be a clown. But he was not willing to be mocked for his own personal gain as so many reality-television stars are. Bol let himself be ridiculed on behalf of suffering strangers in the Sudan; he was a fool for Christ.
During his final years, Bol suffered more than mere mockery in the service of others. While he was doing relief work in the Sudan, he contracted a painful skin disease that ultimately contributed to his death.
Bol's life and death throws into sharp relief the trivialized manner in which sports journalists employ the concept of redemption. In the world of sports media players are redeemed when they overcome some prior "humiliation" by playing well. Redemption then is deeply connected to personal gain and celebrity. It leads to fatter contracts, shoe endorsements, and adoring women.
Yet as Bol reminds us, the Christian understanding of redemption has always involved lowering and humbling oneself. It leads to suffering and even death.
It is of little surprise, then, that the sort of radical Christianity exemplified by Bol is rarely understood by sports journalists. For all its interest in the intimate details of players' lives, the media has long been tone deaf to the way devout Christianity profoundly shapes some of them.
Obituary titles for Bol, for example, described him as a humanitarian rather than a Christian. The remarkable charity and personal character of other NBA players, including David Robinson, A. C. Green and Dwight Howard, are almost never explicitly connected to their own intense Christian faith. They are simply good guys.
Christian basketball players hope that their "little lights" shine in a league marked by rapacious consumption and marital infidelity. They could shine even brighter if sports journalists acknowledged that such players seek atonement and redemption in a far more profound way than mere athletic success.
Jon A. Shields is assistant professor of government at Claremont McKenna College.
Posted by RB at 12:53 PM
Thursday, June 17, 2010
Today (Thursday) we went to the Great Wall. This is a mandatory tourist event and it takes about eight hours. First you buy your ticket and wait on a bus. Today had rain early on so it wasn't the popular day to visit the Wall. As a result we had to wait an extra hour for the bus to fill. These folks don't waste empty seats.
Except for one other couple, everyone on the bus was Chinese and the tour guide did not speak English. This turned out to be a blessing. The first 40 minutes of the bus ride she spoke nonstop and fast. Then she stopped for five to ten seconds to ask the driver a question and then started up again. I have never seen someone talk so long so nonstop and so fast.
We had to stop at a jade factory, which consisted of a ten by ten room where a couple of guys were cutting jade and a humongous room where dozens of women tried to sell you jade.
We spent a couple of hours at the Wall and the sun came out for us. Now we are really tired. Not so much from today but from yesterday: eight hours on our feet on concrete at Tienanmen Square, The Forbidden City and Jingshan Park.
Posted by RB at 9:31 AM
Saturday, June 12, 2010
Mrs. B. and RB leave for China on Monday. We have the visas in our passports, tickets for international travel, tickets for China domestic travel, lodging reservations (with copies in both English and Chinese) as well as a Beijing Metro map.
We are scheduled to arrive Tuesday afternoon in Beijing, play tourist for a few days, and then travel to see MissBeee in Weihai (point A on map) on Saturday.
In the meantime we are busy with all the last minute stuff to get ready.
Posted by RB at 12:04 PM