Undead Astronauts

We’re still struggling to recover from the worst economic downturn since the Great Depression and what have policy makers learned? Absolutely nothing. Nada, zip, zilch, zero.

The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.

President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.

In response, administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default.

Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.

I really shouldn’t be surprised, but I am. I suppose I haven’t learned anything either.

“If you were going to tell people in low-income and moderate-income communities and communities of color there was a housing recovery, they would look at you as if you had two heads,” said John Taylor, president of the National Community Reinvestment Coalition, a nonprofit housing organization. “It is very difficult for people of low and moderate incomes to refinance or buy homes.”

Ah, so now we have the real reason. We have to make sure that blacks and Hispanics get to live the American dream. That’s a noble idea, but not when it doesn’t make economic sense and not when they were the ones originally tricked into the subprime loans they couldn’t afford that kicked this entire ordeal off.

Home ownership correlates with a host of positive outcomes for the home owner, but the arrow of correlation might not point from home to betterment but the other way around.

Wanted to pass this video along.

I knew the distribution was very unequal beforehand, but it’s helpful to visualize the information. There was a moment when seeing that distribution made me again think of inherited wealth and it’s unfairness, but I decided to look the information up this time. A 2001 study showed that for the top 1%, only about 9% of their current wealth is inherited. I had thought that it was something closer to 20-30%, but I’m glad to be proven wrong. My opinion on the estate/death tax hasn’t changed (in favor), but I’m glad that it’s impact is not quite as large as I had previously imagined.

First seen here.

I’ve had a long standing opinion that the estate tax (or death tax if you prefer) has real value. It allows a rich person to do whatever he wants with his wealth while he’s alive, but it also prevents his descendants from using his accumulated wealth to stay an elite when they did little to nothing to earn it. As of 2011, up to $5M can be bequeathed from an individual without incurring this tax. $5M is enough that a moderately capable descendant should be able to continue life in a comfortable fashion. The term “a man of leisure” describes exactly the type of social standing I wish to eliminate; a person so wealthy from inheritance that they have no need to get a job or be burdened by any responsibilities. Munny happens to disagree with this view, as he believes an individual should be able to do what they want with their money even after death.

A new study by Gregory Clark (A Farewell to Alms) has shown that as much as 60% of your relative economic and social standing may be determined by lineage. It doesn’t matter whether you live in the US, Japan or Sweden. Contrary to the common view that wealth can appear and disappear within 3-4 generations, his research has shown that it might take near millenia for a complete cycle from commoner to wealthy elite and back. It wasn’t affected by the Industrial Revolution, the communist revolution in China, nor the various modern social policies put in place in recent decades around the world. The only apparent outlier to the trend is India, where social mobility is even lower than the rest of the world, presumably due to the legacy of the caste system.

The study, if it turns out to be true, only reinforces my belief that the estate tax is one of the best ways to tax the populace. Since the relative position of the descendants isn’t threatened regardless of the social policy of the day, it almost argues for an even more aggressive pro-social mobility policy to be enacted. I won’t go so far as to say the $5M threshold should be lowered, but I do believe it should at least be left in place. Mitt Romney wants to abolish the estate tax. I have been undecided on who to vote for up until this point, but Clark’s report has made up my mind for me.

Pew Research has a wide ranging report on the status of Asians in the US. One wonders if the author was thinking about China’s “rise” when he titled this report.

It covers some familiar ground about education and income (Asians are group with highest in both). It also reaffirms some long held views that I haven’t seen numbers on, such as importance of family.

More than half (54%) say that having a successful marriage is one of the most important things in life; just 34% of all American adults agree. Two-thirds of Asian-American adults (67%) say that being a good parent is one of the most important things in life; just 50% of all adults agree.

They are more likely than all American adults to be married (59% vs. 51%); their newborns are less likely than all U.S. newborns to have an unmarried mother (16% vs. 41%); and their children are more likely than all U.S. children to be raised in a household with two married parents (80% vs. 63%).

The tiger mom perception is confirmed to no one’s surprise.

Nearly four-in-ten (39%) say that Asian-American parents from their country of origin subgroup put too much pressure on their children to do well in school. Just 9% say the same about all American parents. On the flip-side of the same coin, about six-in-ten Asian Americans say American parents put too little pressure on their children to succeed in school, while just 9% say the same about Asian-American parents.

Religiosity and political views in this survey generally matches the information posted yesterday. There’s a ton more information in the full report, but it’s so large I haven’t finished reading it. Here are some of the key numbers.

The full report is 8 pages. Quite comprehensive and really too much to cover in a blog post. As I read more of it, I’ll post anything that sticks out.

I came across a fascinating article awhile back about a physicist talking to an economist about the limits of economic growth or lack thereof. Previously, I held the view that there was no such limit or if there was a limit, it would be ages before we hit it. I thought that a capitalist system would unfailingly find a way to get more productivity and/or more efficiency out of the same resources practically ad infinitum. After reading the article, I’m convinced that not only will it not happen, but that other advances might similarly be in jeopardy of failing to meet the expectation of continual improvement. Growth is not unbounded and exponential but rather sigmoidal.

(more…)

Sigh… another good reason to live in Huntsville. In terms of salary value, Huntsville ranks #2 in the nation behind New London, Conn and ahead of Baltimore. The “interestingness” of the city leaves a great deal to be desired, but at least there’s a silver lining. Hyuck hyuck.