Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Category: Economics Page 1 of 88

If You Really Hate DEI & Actually Want Merit, There Is A Way

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On January 23, 2025

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There’s a lot of pushback on DEI these days, with some major companies ending their DEI programs. This has been tied into the competence crisis, which is bullshit.

Let’s put the idea that there isn’t massive discrimination to rest. There have been many studies. One found that identical resumes from people with black names vs. people with white names had half the interview requests. A meta-study found the effect less overall: 24%.

Now I don’t know if DEI overcomes that, but modern studies don’t find any less of a gap, so I’m guessing “no”, though the effect on promotion may be more significant.

The obvious solution is to do something similar to the how orchestras evaluate musicians: they place them behind a screen, and they play their music. The evaluators don’t know who’s playing, or anything about them.

Modern technology makes this viable: wipe the resume of any identifying remarks and do the same with any testing. Have the interview with an avatar with a computer masked voice. If you really want to evaluate entirely on merit: their record and their abilities, that would be the way to do it.

The counter-argument is “cultural fit” and I’m not going to say that there’s nothing to it. The evidence is that diverse teams improve quality at the cost of speed and increased conflict but the benefits don’t accrue for teams which don’t work together much. If you’re doing something you already know how to do, where quality isn’t much of a factor, speed is and team members don’t interact much anyway, then there’s a case for “cultural fit” teams. But if you’re dealing with uncertainty, or quality is more important than speed, then a diverse team is probably better.

(Amusingly the evidence is that startup funds perform less well without diversity, but silicon valley hates diversity and prioritizes fit, which is one reason for their under-performance the last couple decades since the tech-bros took charge.)

I’m not a huge fan of DEI. It introduces a variable that shouldn’t matter. Problem is that variable already matters, and DEI is an effort to counter people hiring less competent people because of prejudice.

But there is another solution: one that prioritizes merit, at least for hiring (and it could be extended to some types of promotion decisions). Decisions based on blinding out gender and race.

If the real issue is merit and not something else, this is the obvious way to go. Strange how rarely it is suggested.

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The Competency Crisis Is Not About DEI

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On January 15, 2025

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That DEI (women and brown people) are responsible is a constant right wing cry.

The competency crisis is a result of an economy where making money without making a product is easier than making something. We prioritized financial profits—multi generational rises in asset prices that were faster than inflation. Housing went up. Stocks went up. Private equity earned money buy buying companies, larding them up with debt, and running them into the ground. Profits were juiced by moving production offshore and engaging in regulatory and labor arbitrage.

The best profit came from playing financial games and rentierism. You didn’t have to make anything or delivery anything, you just had to find a way to squeeze money out of something by making it go up faster than inflation, or by destroying something which was already built, taking all the future value now and giving it to yourself. Even the (old) Middle Class got in on this, by buying houses when they were cheap, watching them appreciate faster than wages, then selling them when old and moving south to be have their bums wiped in cheaper southern states by brown immigrants.

Everyone wanted to make money without having to create to get it. Mostly they either wanted to get unearned money from appreciation, to destroy what others had built, or to capture a market in an oligopoly or monopoly so they could juice prices.

Meanwhile, the manufacturing floor moved to China and elsewhere. The people who knew how to make things retired, moved to other jobs, retired and eventually died.

We can’t build most things because we haven’t prioritized building things, or getting better at building things since the 70s. The eighties are where predatory capitalism took hold, and since then the whole game has been rentierism, unearned gains, predation and arbitrage.

DEI doesn’t much matter in comparison. The people running the economy for the last 45 years have been mostly white males, and that doesn’t matter either. Women or brown people would have done the same thing. Margaret Thatcher was a woman, and one of the founders of this mindset.

No one’s competent at actually doing things, except profit extraction, because our societies haven’t prioritized doing anything but extracting profit for over 45 years. Everyone who lived in a society that was about really delivering products and making things is dead or retired.

if you want a competent society again, make it so that no one can get wealthy, let alone rich, without really making something or improving people’s lives. And no, Facebook and Google and so on don’t count, because they were started as good, and made shitty to increase profits. That’s the opposite of what’s needed. (AI in the US will be the same.)

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Elon Musk Threatens Congress Successfully

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On December 20, 2024

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This is some amazing shit:

Congress was about to vote on a bill called a “Continuing Resolution”, which would fund the operations of the federal government. But yesterday, Musk started tweeting around the clock about how he hated the bill and that he would fund the campaigns of politicians who ran against Congress members who supported it.

….Shortly after Musk decided he was against the Continuing Resolution, Trump and JD Vance issued a statement saying they were against it, too. The politicians in Congress fell in line, and now it looks like the government funding plan is dead.

Here’s the thing. Being rich only means you’re good at making money in a specific way. It doesn’t mean anything else. Gates, for example, pushed the “Common Core” education changes, and there’s no evidence they did any good and some reason to think they were harmful.

We have a rich man (maybe a billionaire) as President. We have Musk, the world’s richest man, who spent a lot money helping Trump win as one of the most important people in the new administration, who has said he wants to cut Social Security and Medicare.

Money is the ability to tell people what do. It let’s you control their actions, either directly or indirectly.

FDR defined fascism as:

Ownership of Government by an individual, by a group, or by any other controlling private power

The US has been trending towards oligarchy for ages. The final victory for oligarchy was probably “Citizen’s United”, which made money the same as speech and thus protected under the first amendment.

The famous Princeton oligarchy study, which used data from 1981-2002, which is to say from back when the rich weren’t nearly as powerful as they are now, found that:

…when one holds constant net interest-group alignments and the preferences of affluent Americans, it makes very little difference what the general public thinks. The probability of policy change is nearly the same (around 0.3) whether a tiny minority or a large majority of average citizens favor a proposed policy change (refer to the top panel of figure 1).

By contrast—again with other actors held constant—a proposed policy change with low support among economically-elite Americans (one out of five in favor) is adopted only about 18 percent of the time, while a proposed change with high support (four out of five in favor) is adopted about 45 percent of the time. Similarly, when support for policy change is low among interest groups (with five groups strongly opposed and none in favor) the probability of that policy change occurring is only .16, but the probability rises to .47 when interest groups are strongly favorable (refer to the bottom two panels of figure 1). Footnote 41

Musk is the world’s richest man. He threatened members of Congress using his money, and they caved.

It’s always amusing when Americans call Russia an oligarchy. It isn’t. Russia’s oligarchs have very little power compared to Putin. If they cross him, he destroys them. They do what he wants, when he wants or they go to jail or have to flee the country, giving up any wealth in Russia.

America, on the other hand, is sickeningly an oligarchy and it’s going from indirect to direct oligarchical control.

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France Is Being Kicked Out of YET Another French Country

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On November 29, 2024

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Recently French troops have had to leave Mali, Niger and Burkina Faso. Now it’s Chad booting them.

Update: Senegal has now announced it intends to seek the withdrawal of French troops.

The first three countries have Russian troops in them now. Wonder how long it’ll be before Chad joins the crowd?

France has been the most important country in a lot of its ex-colonies in Africa, but it’s losing its place, not just militarily but economically. Countries are turning to China for imported goods and development at the same time as they turn to Russia for security. Chinese goods, development and loans are cheaper, and neither Russia nor China interfere nearly as much in domestic politics.

It’s just a better deal. For a long time you HAD to go to the West, but now Russia and China can supply pretty much everything you need.

 

As regular readers know I’ve been following Europe’s collapse for a few years now. It’s practically a freefall. In Germany Volkswagon, for example, is planning on closing factories for the first time.

Europe’s well on its way to being what it was for most of history: a backwards and irrelevant peninsula, with the main action and most important civilizations elsewhere in Asia.

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Why Assisted Suicide Bills Will Proliferate & Deaths Will Increase

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On November 25, 2024

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Nothing saves money on people who are old, disabled and unable to work like just killing them.

Covid killed mostly old people. That saved the government money in the long run, although in the short run it was expensive, except for Sweden where they just euthanized their old people with Covid instead of treating them. (Gave them opiods even when they had enough oxygen and drugs.)

Since Covid, however, there’s been an unfortunate increase in people who can’t work because they’re chronically ill.

This isn’t hard to understand. Britain is massively importing young people who can work, or older people who have lots of money, but at the same time the number of people who are liabilities, financially speaking, is exploding. If you have a liability the easiest way to get rid of it is to… get rid of it.

Canada’s in the same boat, and these bills will spread.

Assisted suicide isn’t automatically a bad thing, mind you. If people were properly supported and cared for I’d support it. People who are in a ton of pain and won’t get better ought to have the option.

But when the government is whining about benefits and cutting them, as in Britain, one doesn’t expect this is being done from a humanitarian impulse. And the medical and social workers, in hospitals and palliative care centers that are overstretched and don’t have enough nurses or doctors or beds, well, convincing someone who’s taking up time or a bed to just die already will have to be pretty tempting, sometimes even with somewhat good motives: to free up resources for people who can be cared for.

But, of course, what will often happen is that chronically ill people or homeless types who could live for quite a long time and with proper care could be fairly happy will wind up dead because in Britain and Canada we don’t help them enough: to get enough housing, food, help and pain meds (given the way we’re so scared of opiates.)

Wikipedia lists some known cases of abuse of the law:

  • In 2017, a mother of a young woman with cerebral palsy was told by a doctor that not applying for MAID was “selfish”. Her daughter was in the room when the conversation took place and described the experience as traumatic.[71]
  • In 2018, Roger Foley was being treated for cerebellar ataxia at an Ontario hospital. Foley alleged that his only options were to be forcibly discharged from the hospital and then treated by an organization that had previously failed to provide him adequate care or apply for MAID. Foley hired a lawyer for a charter challenge.[72]
  • In 2019, Alan Nichols successfully applied for MAID while being hospitalized for suicide ideation. The reason given on his application was hearing loss.[1]
  • In September 2021, Rosina Kamis, a 41-year-old Malaysian woman, applied for MAID citing fibromyalgia as the reason. However, in conversations and recordings shared with friends, she mentioned financial hardship and social isolation as additional factors influencing her decision.[73]
  • In February 2022, an anonymous Torontonian suffering from extreme chemical sensitivity syndrome with the pseudonym Sophia had a medically assisted death after failing to find affordable housing that was free from tobacco smoke and other chemicals.[74] This case was addressed by her health care provider in testimony provided to the Special Joint Committee on MAID, and was referenced in their final report.[75]

One can safely assume there are many, many more. The fact is that even doctors and social workers think some lives are worth more than others. No one who’s spent time in the medical system believes otherwise.

The West is in decline. Our elites are wedded to austerity as a “solution”. They often, probably usually, feel that people who are non-productive are useless eaters and a burden on the state.

That combination is going to lead to a truly vast expansion of measures intended to get people off benefit rolls.

In a way assisted suicide, or euthanasia, is the most honest of those policies and maybe even the most merciful. There’s nothing honest about deliberate policies which make people homeless, leading to most of their deaths, after all. Politicians know that winding up on the street long term is essentially a death sentence, they know that policies like mass immigration without increasing the housing supply to match will cause homelessness, so they know their policies cause homelessness and death but they can pretend it’s an unintended side effect.

Just killing people is at least not hypocritical.

***

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What Is A Communist?

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On November 11, 2024

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One annoying tendency in modern political discourse is right wingers and centrists calling people communist.

They don’t know what the word means.

A communist believes that the means of production should be owned and controlled by the proletariat: the workers.

If you don’t believe this, you aren’t a communist. Wanting universal healthcare doesn’t mean you’re a communist unless you think the health workers themselves (or, just perhaps, the party or government) should control the healthcare providers.

Wanting universal healthcare, in the modern context, makes you a socialist.

Now there’s a lot of argument around what it means for the proletariat to control the means of production. If the “Party” controls it, like in the USSR or pre-Deng China, is that communism, or is it just old fashioned government authoritarianism?

Is modern China communist? About half the economy isn’t controlled by the Party, and worker co-ops are minor players. There’s clearly a capitalist class controlling vast amounts of the means of production, though government is very willing to intervene. The Chinese Communist party says this is still communism but that seems like a stretch to me. The same is true in Vietnam: the Communist party is in charge, but the economy isn’t communist.

Note that you could have a market economy which IS communist. If workers co-ops or something similar control most of the organizations, that would be communism, and it’s something that a lot of intellectuals in America and Europe during the 50s pushed for: a sort of “best of both worlds.”

Centralized control economies like the USSR, from this point of view can’t really be communist, because the workers aren’t really controlling capital.

For myself, I’d say moving away from stock companies and towards a mix of worker owned organizations and perhaps mutual companies (or mixed versions) would be the best way to move towards something that might both be communist and workable, allowing the dynamism of the market.

Generally speaking my time in the workforce convinced me that upper management is usually clueless because they don’t do the job and haven’t done it in ages. You have to be on the front lines to have some idea what the issues actually are.

Communism is worker control of capital, and nothing else. We’ve never really tried it.

It’s The Economy, Stupid (AKA Economists)

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On November 6, 2024

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Over ninety-nine percent of economists did not predict the 2008 financial crisis.

The vast majority of economists were pro-globalization, by which I mean pro offshoring and outsourcing. They said it would be good for America, they were wrong.

China is predicted to wind up with over 50% of the world’s industry by 2030. Forget all the bullshit about great power competition. It’s over. There may be a war, but if there is one the West will either lose or the world will be destroyed in a nuclear exchange.

Back in the 90s an economist called Brockway liked to say “Economists are bad for your health.”

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Let’s bring this back to the election. I thought that abortion would be the election defining issue. Stupid of me, though abortion was and only four percent behind inflation. It was inflation, which given how much I write about it, I should have expected. Two tables from the CNN exit polls:

Abortion was the second most important issue. Inflation was , and people who voted for pro-abortion measures voted about 9% less for Harris.

Economists meanwhile keep talking about the : the idea that there is no recession, people just think there is.

Economists, as usual, are full of shit. They have a professional dependence on official statistics and refuse to realize that many of them don’t reflect reality. As I have written in the past, according to official inflation statistics the price of cards did not rise between 2000 and 2020. In another case, you will be happy to know that medical service costs are going down. Hedonic adjustments are completely out of control: prices are dropping, you see, because products are so much better now. (There are other finangles, this is the main one.)

Growth numbers are based entirely on nominal growth minus the inflation rate, as are real wage numbers.

I would bet that the US economy has been contracting since 2008, but since inflation is understated, it isn’t visible.

I would also bet that median welfare for Americans has been declining since somewhere between 1968 and 1979, though average might have been increasing till 2008 because of how much money was being shoveled to the rich and wealthy.

We live in a pretend world, and economists are the chief pretenders, the sycophants telling the Emperor how wonderful his new clothes are.

To riff on Galbraith, economists exist to make astrologers look good.

Economics, as a discipline, should be wiped from the face of the Earth. The less than 1% of economists who aren’t charlatans or fools are not enough to justify the harm economists do, which exceeds even that of MBAs.

Harris lost because of the insistence of Democrats that the economy was good, inflation was fine, and that voters were too stupid to read their own grocery bills. Because of this belief Harris said she wouldn’t have done anything different than Biden did. What she needed to do was get out there and say she was going to drive down prices, especially rent and groceries.

As for Trump, we’ll talk more about the effects of his economic plans, if instituted, later.

When Labour Opposes Rapid Technological Change

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On November 1, 2024

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So, I recently saw this:

our obsession with jobs might trap us – everything could look like healthcare, still using fax machines when email and text exists.

“sorry I know this is possible via AI but we have our manual spreadsheet guy, following regulation 1284”

Leaving aside the word “AI”, because it’s not clear how expansive the use case for current AI really is, there’s a point here and it’s an important one.

He’s exactly right about our obsession with jobs, but I’d state it a different way:

It’s our obsession with distributing resources through money gained by jobs. A pre-requisite of speedy technological adaptation is people knowing they won’t be hurt by it.

Recently we had the longshoreman’s strike. The issue that caused the strike is machines replacing workers. Longshoreman jobs are some of the few blue collar labor jobs that pay well. If the longshoremen lose them, most will never get a job again that pays as well.

But the issue isn’t the job. It’s the money. And the money is just a proxy for resources: housing, food, heat, cold, transport, medical, entertainment and so on. No money and your life is shit, and probably short. Not much money means misery in most cases.

Labor; which is to say the proletariat, people who have to sell their labor to survive, embrace technological change when it benefits them, when it doesn’t hurt them, or when they have no choice.

During the industrial revolution people were forced off the land thru enclosure. They worked in factories 12 hours a day, for 6 1/2 days a week because they had no choice.

After WWII in America, people flooded off the farms into the cities and suburbs because jobs that provided a better standard of living for less work were abundant.

(This blog is for understanding the present, making educated guesses at the future, and telling truths, usually unpleasant ones. There aren’t a lot of places like this left on the Web. Every year I fundraise to keep it going. If you’d like to help, and can afford to, please Subscribe or Donate.)

This lesson goes far beyond workers. No one wants change that hurts them. One of the main factors stalling industrialization in most countries was that most land couldn’t be bought: it was controlled by nobles or the Crown and they didn’t sell land if they could help it. The land was the basis of their wealth and power. Until they either perceived otherwise or they lacked the power to keep their land, they wouldn’t sell. (The game Victoria III, while not a very good game, is great for modeling this. Play Japan or Dai Viet and you will FEEL this: sheer hate of reactionary landowners holding you back.)

There was also the issue of money: for most of the Dark Ages and Middle Ages you couldn’t borrow large amounts of money, in part because the Church was against lending at interest and the Church was powerful. (There were other reasons, Economists include them in their hand waving of “primitive accumulation of capital” which is why sociologists, anthropologists and historians have written most of the important literature in the area.)

If you want change, whether technological or social, you either have to get people to be OK with it (for it, or not mind) or you need to remove their power to resist.

It is that simple.

 

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