Category: Economics

“Race-Conscious Affirmative Action” Creates “Racial ‌Animosity”

(p. A1) Since picking up a memoir of Robert F. Kennedy at a garage sale his senior year of high school, Mr. Kahlenberg, 59, has cast himself as a liberal champion of the working class. ‌ For three decades, his work, largely at a progressive think tank, has used empirical research and historical narrative to argue that the working class has been left behind.

That same research led him to a conclusion that has proved highly (p. A17) unpopular within his political circle: that affirmative action is best framed not as a race issue, but as a class issue.

In books, ‌articles and academic papers, Mr. Kahlenberg has spent decades‌ ‌arguing for a different vision of diversity, one based in his 1960s idealism. He believes that had they lived, Kennedy and the Rev. Dr. Martin Luther King Jr. would have pursued a multiracial coalition of poor and working class people, a Poor People’s ‌Campaign that worked together toward the same goal of economic advancement in education, employment and housing. ‌ ‌

Race-conscious affirmative action, while it may be well intentioned,‌ ‌does just the opposite, he says — aligning with the interests of wealthy students‌ and creating racial ‌animosity.

With class-conscious affirmative action, “Will there be people in Scarsdale who are annoyed that working-class people are getting a break? Probably,” he said in an interview. “But the vast majority of Americans support the idea, and you see it across the political spectrum.”

His advocacy has brought him to an uncomfortable place. The Supreme Court is widely expected to strike down race-conscious affirmative action this year in cases against Harvard and the University of North Carolina. He has joined forces with the plaintiff, Students for Fair Admissions, run by a conservative activist; the group has paid him as an expert witness and relied on his research to support the idea that there is a constitutional “race-neutral alternative” to the status quo.

That alliance has cost him his position as a senior fellow at the Century Foundation, the liberal-leaning think tank where he had found a home for 24 years, according to friends and colleagues.

. . .

Mr. Kahlenberg studied government and went on to Harvard Law School, where he wrote a paper about class-based affirmative action, advised by Alan Dershowitz, his professor, known for defending unpopular causes and clients.

The paper inspired him to write his influential 1996 book, “The Remedy,” which developed his theory that affirmative action had set back race relations by becoming a source of racial antagonism.

“If you want working-class white people to vote their race, there’s probably no better way to do it than to give explicitly racial preferences in deciding who gets ahead in life,” he said. “If you want working-class whites to vote their class, you would try to remind them that they have a lot in common with working-class Black and Hispanic people.”

For the full story, see:

Anemona Hartocollis. “Acolyte of the Left Aims to Kill Race-Based College Admission.” The New York Times (Thursday, April 6, 2023): A1 & A17.

(Note: ellipsis added.)

(Note: the online version of the story was updated April 3, 2023, and has the title “The Liberal Maverick Fighting Race-Based Affirmative Action.”)

Kahlenberg’s “influential” book mentioned above is:

Kahlenberg, Richard D. The Remedy: Class, Race, and Affirmative Action. New York: Basic Books, 1997.

For Musk, Buying Twitter “Needed to Be Done”

(p. A8) LONDON — Billionaire Elon Musk told the BBC that running Twitter has been “quite painful” but claimed the social media company is now roughly breaking even after he acquired it late last year.

In an interview also streamed live late Tuesday [April 11, 2023] on Twitter Spaces, Musk discussed his ownership of the online platform, including layoffs, misinformation and his work style.

. . .

After acquiring the platform, Musk carried out mass layoffs as part of cost-cutting efforts. He said Twitter’s workforce was slashed to about 1,500 employees from about 8,000 previously.

“It’s not fun at all,” Musk said. “The company’s going to go bankrupt if we don’t cut costs immediately. This is not a caring-uncaring situation. It’s like if the whole ship sinks, then nobody’s got a job.”

Asked if he regretted buying the company, he said it was something that “needed to be done.”

For the full story, see:

Associated Press. “Musk says owning Twitter ‘painful’ but needed to be done.” Omaha World-Herald (Tuesday, April 13, 2023): A8.

(Note: ellipsis, and bracketed date, added)

(Note: the online version of the story has the date April 12, 2023, and has the same title as the print version.)

National Public Radio (NPR) Is “U.S. State-Affiliated Media”

Nobel-Prize-winner F.A. Hayek in The Road to Serfdom wisely worried about the independence of the press when it is funded by the government.

(p. B6) Twitter on Tuesday [April 5, 2023] evening added a label to National Public Radio’s account on the social network, designating the broadcaster “U.S. state-affiliated media.”

. . .

Twitter’s guidelines define state-affiliated accounts as “outlets where the state exercises control over editorial content through financial resources, direct or indirect political pressures, and/or control over production and distribution.” Other news media accounts with the label include RT of Russia and Xinhua of China.

According to cached versions of Twitter’s published policy, for much of Tuesday the guidelines noted that NPR and the BBC of Britain did not receive the label because they were “state-financed media organizations with editorial independence.” The reference to NPR has since been deleted from that policy.

. . .

Mr. Musk did not respond to a request for comment, and an email to Twitter’s communications department was returned with a poop emoji autoreply. Mr. Musk tweeted in apparent support of the move, posting a passage from Twitter’s policy and saying it “seems accurate” in a reply to a user pointing out the label on NPR’s account.

For the full story, see:

Lora Kelley. “In Policy Shift, Twitter Calls NPR ‘State-Affiliated Media.” The New York Times (Thursday, April 6, 2023): B6.

(Note: ellipses, and bracketed date, added.)

(Note: the online version of the story has the same date April 5, 2023, and has the title “Twitter Labels NPR ‘State-Affiliated Media,’ in Change to Policy.”)

Hayek’s book mentioned above is:

Hayek, Friedrich A. von. The Road to Serfdom. Chicago: University of Chicago Press, 1944.

Recent Degrowth Policies Will “Reduce Medicare and Social Security Tax Revenue by at Least $400 Billion”

(p. A13) President Biden released his 2024 budget request Thursday while continuing to accuse Republicans of scheming to cut benefits for seniors. But he’s got it backward. By advancing policies that hinder the economic growth that drives prosperity, Mr. Biden and his Democratic colleagues are the ones depriving Social Security and Medicare of the hundreds of billions of dollars those programs need to remain solvent.

. . .

My own research on the Biden agenda’s effect on Social Security and Medicare makes clear that low economic growth translates into smaller benefits for seniors. These programs give the elderly a share of the earnings of the nation’s current workers. The more people who work, and the more each worker earns, the more payroll tax revenue is available to fund Social Security and Medicare. I estimate that degrowth policies since 2020 will cumulatively reduce Medicare and Social Security tax revenue by at least $400 billion—and perhaps as much as $900 billion. The tax base will shrink even more if Mr. Biden succeeds in levying higher wealth and business taxes.

For the full commentary, see:

Casey B. Mulligan. “Biden’s Assault on Social Security.” The Wall Street Journal (Monday, March 10, 2023): A13.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date March 9, 2023, and has the title “Biden’s Budget Is an Assault on Social Security.”)

A somewhat more detailed version of Mulligan’s argument can be found in:

Mulligan, Casey B. “Payroll Tax Revenues Down $400 to $900 Billion Due to Lower Wages and Less Growth.” Washington, D.C.: Committee to Unleash Prosperity, March 2023.

Poor People Benefit More From “Entrepreneurial Capitalism” Than From Philanthropy

(p. A15) Paul David Hewson said it best during a 2012 speech at Georgetown University. Wait, who? “Aid is just a stopgap,” said Mr. Hewson, whose stage name is Bono. “Commerce [and] entrepreneurial capitalism take more people out of poverty than aid. We need Africa to become an economic powerhouse.” We still haven’t found what he’s looking for. An economic powerhouse would be able to afford mosquito nets and malaria drugs without handouts. That should be the endgame.

. . .

At its best, lots of philanthropy is very useful, but may not be sustainable over time—a sugar high that rarely enables that “teach a man how to fish” thing. Effective altruism may be an oxymoron. And it’s hard to miss that much of philanthropy is to fix government failures in education, welfare or medicine. I think that was Bono’s point.

But at its shadiest, philanthropy drives the misallocation of capital, overvaluing professors, the U.N. and climate poets and undervaluing those who can productively increase societal wealth to fund solutions to the future’s harder problems.

If only there were a way to use capital to provide opportunity, train workers, pay middle-class wages, help people build wealth . . . wait, it just came to me. How about starting new companies and investing in entrepreneurs and world-changing technology?

For the full commentary, see:

Andy Kessler. “INSIDE VIEW; A Wrench Thrown Into Capitalism.” The Wall Street Journal (Monday, April 17, 2023): A15.

(Note: ellipsis between paragraphs, added; ellipsis internal to last quoted paragraph, in original; bracketed word in original.)

(Note: the online version of the commentary has the date April 16, 2023, and has the same title as the print version.)

Public Unions Are “Designed for Inefficiency”

(p. A13) Mr. [Philip] Howard, a lawyer and writer, first noticed how unions stymie governance during his public service in New York as a member of a neighborhood zoning board and chairman of the Municipal Art Society. “I kept wondering why my friends who had responsible jobs in government couldn’t do what they thought was right,” he recalls. That might be speeding up a land-use review for a construction project or approving repairs on a school building.

“I’d have discussions with them about what made sense in a particular situation, and they would say, ‘I wish I could, but I can’t.’ ” Any careful or profitable plans were quickly blown up by union rules, such as limits on workers’ hours and duties.

This week the New York transit union gave an example for the ages. It blocked the subway system’s plan to sync its schedule to new ridership norms, with fewer trains on slow days and lightly traveled routes and more trains on busy ones. The change would have saved $1.5 million a year, benefited riders and preserved workers’ paid hours. But an arbitrator shelved it Tuesday because the union couldn’t bear the “variations in start and end times.”

“They’re not just inefficient,” Mr. Howard says of the unions. “They’re designed for inefficiency.”

“They’re designed to require a new work crew to come cut a tree limb because the people fixing the rails don’t have authority to remove a tree limb. They’re designed to prevent supervisors from observing teachers, except under very controlled circumstances. They’re designed to prevent the principal from giving extra training to a teacher. They’re designed to prevent a supervisor in an agency from going and talking to a worker and soliciting ideas about how to make things work better.”

Mr. Howard, 74, keeps listing examples until I jump in to stop him. They’re fresh in his mind because these schemes are the target of his new book, “Not Accountable: Rethinking the Constitutionality of Public Employee Unions.”

For the full interview, see:

Mene Ukueberuwa, interviewer. “THE WEEKEND INTERVIEW; Public Unions vs. the People.” The Wall Street Journal (Saturday, March 4, 2023): A13.

(Note: bracketed name added.)

(Note: the online version of the interview has the date March 23, 2023, and has the same title as the print version. In both versions, the word “designed” is in italics.)

Philip Howard’s book mentioned above is:

Howard, Philip K. Not Accountable: Rethinking the Constitutionality of Public Employee Unions. Garden City, NY: Rodin Books, 2023.

College Dropout Put Cheap Stores Where Oil-Stained Pavement Showed Presence of the Poor

(p. A10) Leon Levine, a college dropout, founded the Family Dollar chain in 1959, starting in North Carolina and spreading around the U.S.

He stocked cut-price clothing, food, toys and the smallest packages of toothpaste or hand cream for people without enough cash to buy jumbo sizes. The stores were in low-income neighborhoods or small towns. Mr. Levine sometimes found locations by looking for oil stains on the pavement—a sure sign of the leaky cars driven by poor people.

For the full obituary, see:

James R. Hagerty. “Family Dollar Founder Looked for Oil Stains.” The Wall Street Journal (Saturday, April 15, 2023): A10.

(Note: the online version of the obituary has the date April 12, 2023, and has the title “Leon Levine, Who Made Small Box Retailing Pay, Dies at 85.”)

Bell Labs Allowed Tanenbaum to Pursue Any Research that Interested Him

(p. A11) One evening in 1955, Morris Tanenbaum’s wife was playing bridge with friends. Dr. Tanenbaum, a chemist who worked for Bell Telephone Laboratories, the research arm of American Telephone & Telegraph Co., saw a chance to dash back to work to test his latest ideas about how to make better semiconductor devices out of silicon.

He tried a new way of connecting an aluminum wire to a silicon chip. He was thrilled when it worked, providing a way to make highly efficient transistors and other electronic devices, an essential technology for the Information Age.

“I don’t think I needed a car to get home that evening,” he said later in an oral history recorded by the IEEE History Center. “I was flying high.”

Dr. Tanenbaum’s pioneering work in the mid-1950s demonstrated that silicon was a better semiconductor material for transistors than germanium, the early favorite. He earned seven patents.

He later served as a senior executive of AT&T and helped manage the breakup of the phone monopoly mandated by the 1982 settlement of a Justice Department antitrust suit. At the signing of the consent decree, Dr. Tanenbaum cried gently, according to “The Deal of the Century,” a history of the breakup by Steve Coll.

What pained him most was the fate of Bell Laboratories, which had invented the transistor in 1947 and allowed him, as a young Ph.D. chemist in the early 1950s, to pursue basic research even if it didn’t promise near-term financial rewards.  . . .

“Bell Laboratories, the world’s premier industrial laboratory, was destroyed, a major national and global tragedy,” he wrote later in an unpublished memoir written for his family.

. . .

Hired by Bell Laboratories in Murray Hill, N.J. in 1952, he was told to look around for a research project that interested him. Researchers were allowed to pursue nearly any project “potentially related to some Bell System problem or future opportunity,” he wrote later. “What more could a young person expect?”

He zeroed in on studies of potential semiconducting materials. The first transistors were made from germanium, but that material was expensive. Silicon is abundant and thus cheaper. It also helps prevent overheating of circuits. Early efforts to use silicon for electronic devices hadn’t worked well, though. That was a challenge for Dr. Tanenbaum and his colleagues, including Ernie Buehler.

They weren’t alone in finding ways to use silicon. Gordon Teal was doing similar work at Texas Instruments Inc. in the mid-1950s. “From that moment forward, the world was focused on silicon,” Dr. Tanenbaum wrote.

Though AT&T made early breakthroughs, other companies, including Intel Corp. and Texas Instruments, charged ahead with better and faster microchips that transformed the world. AT&T was busy trying to defend its telephone monopoly. On the silicon front, Dr. Tanenbaum said, “we kind of dropped the ball.”

For the full obituary, see:

James R. Hagerty. “Chemist Helped Put Silicon in Microchips.” The Wall Street Journal (Saturday, March 04, 2023): A11.

(Note: ellipses added.)

(Note: the online version of the obituary has the date March 3, 2023, and has the title “Morris Tanenbaum, Who Helped Put Silicon in Microchips, Dies at 94.” The fourth paragraph quoted above appears in the online, but not the print, version.)

The book by Col mentioned above is:

Coll, Steve. The Deal of the Century: The Breakup of AT&T. New York: Atheneum Books, 1986.

William F. Buckley, Sr. Spent $100,000 to Fund His Son’s Entrepreneurial Start-Up: National Review

In my Openness book, I give reasons why risky innovative start-ups at fragile early stages almost always need to be substantially self-funded. When close relatives invest, I include that as self-funding.

(p. A15) . . . “William F. Buckley Sr.: Witness to the Mexican Revolution, 1908-1922,” [is] a fascinating if uneven book by the independent historian John A. Adams Jr.

. . .

The business climate in Mexico was promising for foreigners like the Buckleys, thanks to the pro-development policies of its autocratic president, Porfirio Díaz, who would rule the country for more than three decades.

Buckley’s prominence among the American expatriate community made him a natural conduit between officials in the U.S. and Mexico once the latter country was plunged into chaos following the ouster of Díaz in 1911. Buckley was Zelig-like, cropping up repeatedly at key moments. He visited the U.S. Embassy in February 1913 during the Decena Tragíca (Ten Tragic Days), when Francisco Madero, Díaz’s successor, was overthrown in a coup led by Gen. Victoriano Huerta, instigating a spasm of violence that killed thousands in Mexico City.

. . .

Buckley favored Huerta, serving as the regime’s legal counsel in negotiations with the U.S. aimed at preventing hostilities between the two nations. He was thus dismayed by the ascendance of Venustiano Carranza and, later, Álvaro Obregón. Both leaders endorsed the Mexican Constitution of 1917, including Article 27, which asserted national ownership of natural resources while circumscribing the economic power of the church. These provisions horrified Buckley, who was a staunch believer in free-market capitalism as well as a devout Roman Catholic. In the bulletin of the American Association of Mexico, an advocacy group he founded in 1919, Buckley denounced the “dangerous Bolshevist movement” that had taken root in Mexico.

. . .

. . ., Mr. Adams consulted with several Buckley family members, including a descendant based in Mexico City, as well as Judge James L. Buckley, the sole survivor among the 10 children born to Will and his wife, Aloise. Judge Buckley, who recently celebrated his 100th birthday, contributed a foreword acknowledging the importance of Mexico to the family’s understanding of itself, writing that “it had somehow permeated our DNA.”

. . .

As another of his offspring once said, Buckley’s experience in Mexico “deepened his frontier suspicions of autocratic [leaders] (and big government in general), and this attitude dyes all his children strongly.” Surely that was true of Buckley’s favorite son, William F. Buckley Jr., who, after serving a short stint with the CIA in Mexico City (he, too, was fluent in Spanish), founded National Review in 1955, which remains one of the leading voices of the conservative movement. The elder Buckley helped fund his son’s upstart venture with a $100,000 contribution from a fortune that traced its origins to Mexico during the most tumultuous period of that nation’s history.

For the full review, see:

Andrew R. Graybill. “BOOKSHELF; Conservatism’s Mexican Roots.” The Wall Street Journal (Saturday, March 27, 2023): A15.

(Note: ellipses, and bracketed word, added.)

(Note: the online version of the review has the date March 26, 2023, and has the title “BOOKSHELF; ‘William F. Buckley Sr.’ Review: Conservatism’s Mexican Roots.”)

The book under review:

Adams, John A., Jr. William F. Buckley Sr.: Witness to the Mexican Revolution, 1908–1922. Norman, OK: University of Oklahoma Press, 2023.

78% of Americans Not Confident Children Will Be Better Off

(p. A2) An overwhelming share of Americans aren’t confident their children’s lives will be better than their own, according to a new Wall Street Journal-NORC Poll that shows growing skepticism about the value of a college degree and record-low levels of overall happiness.

The survey with NORC at the University of Chicago, a nonpartisan research organization that measures social attitudes, showed pervasive economic pessimism underpins Americans’ dim hopes for the future. Four in five respondents described the state of the economy as not so good or poor, and nearly half said they expect it will get worse in the next year.

. . .

For more than three decades, NORC has asked Americans whether life for their children’s generation will be better than it has been for their own using its General Social Survey. This year 78% said they don’t feel confident that is the case, the highest share since the survey began asking the question every few years in 1990.

. . .

Some 56% of respondents said that a four-year college degree wasn’t worth the cost because people often graduate without specific job skills and with heavy debt.

For the full story, see:

Janet Adamy. “In U.S., Most Doubt Their Children Will Be Better Off, a New Poll Finds.” The Wall Street Journal (Saturday, March 25, 2023): A2.

(Note: ellipses added.)

(Note: the online version of the story has the date March 24, 2023, and has the title “Most Americans Doubt Their Children Will Be Better Off, WSJ-NORC Poll Finds.”)

The poll mentioned above can be viewed at:

WSJ/NORC Poll (March 2023).

Sam Bankman-Fried’s Brother Gabe Helped Send Misappropriated Funds to Dems, and Then Got “The Rock Star Treatment” From Biden White House

(p. B1) The group, Guarding Against Pandemics, raised more than $22 million in its first full year in 2021, turning it into an overnight lobbying force in Washington. The group’s founder, Gabe Bankman-Fried, a former legislative assistant, started getting the rock star treatment: two White House meetings with senior staff and invitations to speak on panels with government officials.

But almost all the money raised by Guarding Against Pandemics appears to have come from Gabe Bankman-Fried’s brother, whom federal prosecutors have accused of misappropriating billions of dollars from customers of his crypto exchange, FTX. The collapse of FTX prompted federal authorities to investigate allegations (p. B6) that sweeping fraud drove the exchange into bankruptcy in November [2023], as well as potential campaign finance law violations by both brothers.

Federal prosecutors in Manhattan have charged Sam Bankman-Fried, 31, with orchestrating a scheme to evade limits on corporate political donations. Prosecutors have said he recruited FTX executives and others to serve as proxies for the crypto exchange and make tens of millions of dollars in illegal political donations using customer money.

The authorities are investigating whether Gabe Bankman-Fried, 28, and some of his colleagues were part of the same so-called straw donor scheme, five people familiar with the matter said, speaking on the condition of anonymity. And they are trying to determine whether he knew some of the funds that his organization received had been misappropriated from customers.

Last month, a top FTX executive, Nishad Singh, pleaded guilty to using company money to make millions of dollars in straw donations to Democratic campaigns and committees.

. . .

The Bankman-Fried brothers relied on a small set of political consultants to guide their spending, applying the principles of effective altruism, the philanthropic movement that has a large following in the tech industry. A top adviser to both brothers was Michael Sadowsky, a committed effective altruist who had worked with the younger Mr. Bankman-Fried at the data firm Civis Analytics.

. . .

With a $25 million cash infusion from Sam Bankman-Fried, Mr. Sadowsky’s PAC became an instant force in Democratic politics. His group supported dozens of progressive candidates and got widespread attention when it spent more than $11 million on an unsuccessful House primary candidate in Oregon, an astonishing sum for such a race.

. . .

Two other key figures in the Bankman-Frieds’ political network had ties to prominent Democrats: Jenna Narayanan, a former political adviser to the billionaire investor Tom Steyer, and Sean McElwee, the founder of Data for Progress, a progressive think tank.

For the full story, see:

Matthew Goldstein, David Yaffe-Bellany and Lora Kelley. “Fraternal Turn to FTX Inquiry.” The New York Times (Friday, March 24, 2023): B1 & B6.

(Note: ellipses added.)

(Note: the online version of the story has the same date as the print version, and has the title “The Younger Brother Caught in the Middle of the FTX Investigation.”)