February 12, 2009

More Seligmania

From the late Daniel Seligman's Keeping Up column in Fortune:

September 10, 1990,

Soon after this article is printed, it will take up residence in the Nexis database and, apparently, become the only verbiage in disk memory whose author is unenthusiastic about diversity in education. The "apparently" is in there because we did not have the strength to make it through every one of the stories that turned up in a Nexis search the other day. We had asked our electronic buddy for all articles wherein "diversity" appears within 30 words of "college," and there is no doubt that the ensuing avalanche showed boundless support for the D word.

Most of the 1,266 entries proffered by Nexis concerned the efforts of colleges to diversify on the racial, sexual, and (a late starter) sex-preferential fronts. (Item No. 56 was about the chap who cited himself as an example of diversity in that he was the first openly gay valedictorian in
Dartmouth history.) Our own special favorite was Item No. 81, a letter to the editor of the New York Times from Mary S. Hartman, dean of all-female Douglass College. Mary was writing about the recent controversy at all-female Mills College, and it turned out, somewhat unstunningly, that she favored the students' efforts there to continue excluding the swains. You might think this was an antidiversity posture, but Mary is too cagey to get caught in one. Her letter argues that single-sex colleges like Mills actually increase diversity by offering another option for female students -- a line of reasoning that management unaccountably forgot to invoke at the Shoal Creek Country Club.

The standard argument for diversity is that it is inherently educational -- that college students learn more when they are surrounded by different kinds of people. This argument was resoundingly sustained by the U.S. Supreme Court in the 1978 Bakke case, which raised the question of whether a university violated the U.S. Constitution by "taking race into account" in the admissions process. In voting nay on that question, the Court quoted an earlier opinion holding that truth is discovered "out of a multitude of tongues" and that a diverse student body enhances the atmosphere of "speculation, experiment, and creation." Also cited in Bakke was the view of an unnamed Princeton graduate who had discovered, possibly as a result of personal experience: "People do not learn very much when they are surrounded only by the likes of themselves."

But somewhere along the way, something has happened to this standard argument for diversity. One problem is that those rhetorical flourishes in the Bakke opinion seem to have no basis in empirical data. A 1985 book called Choosing Elites, by Robert Klitgaard, looked closely at the evidence and concluded: "The educational benefits of diversity . . . are hard to substantiate." Klitgaard, an economist who had been deeply involved in Harvard's admissions process, concluded that universities might be in a more tenable, or at least more intellectually honest, position if they forthrightly acknowledged that preferential admissions policies were designed to help minority groups -- and stopped claiming some mysterious spillover effect that helps students in general.

A more serious, more sinister problem for the Supremes' analysis is that the claims made in the name of diversity seem to get more politicized every year. A fair number of our Nexis printouts concern demands for curricular changes to accompany preferential admissions policies. Succumbing to pressure from radical minority activists, the University of California at Berkeley will require each undergraduate to take at least one course in American Cultural Diversity, and the course must include ethnic cheerleading for at least three groups selected from a menu of five: whites, blacks, Hispanics, Asians, and American Indians.

The latest bad news on this front comes from the University of Delaware. It centers on Linda Gottfredson, a sociologist based at Delaware and a founder of the Project for the Study of Intelligence and Society. Professor Gottfredson has been receiving foundation grants to support her work, much of which has concerned the social consequences of racial differences in intelligence. The grants were provided by the Pioneer Fund, an organization that keeps getting
smeared as "racist" because it finances a fair amount of scholarly research, at many universities, on racial differences.

Recently, the university ruled that nobody at Delaware could continue to receive money from Pioneer. The reason given by Andrew B. Kirkpatrick Jr., chairman of the board of trustees, is that the institution is committed to more "racial and cultural diversity," and this commitment could be "hampered" if university people took money from foundations identified with the idea of group differences.

Nutshell brief, the news is that in the name of diversity we must not study these differences. Ironic, what?


Daniel Seligman's prescient 1989 column on mortgage discrimination

Daniel Seligman, who died last week at age 84, was my role model as a quantitative journalist. From the 1970s into the 1990s, he wrote a blog-like column of multiple short items in Fortune, distinguished by his quantitative bent. Like me and unlike most journalists, he loved to count things. (By the way, it's probably not a coincidence thatmy favorite Sesame Street character is The Count.)

Here's a particularly relevant selection from Seligman's Keeping up columns:

December 4, 1989
MORTGAGE MUMBO JUMBO

Based on a reference to him in the Almanac of American Politics, we had always assumed that U.S. Senator Alan Dixon was relatively harmless. ("Among the least known of all Senators" was how the Almanac referred to the Illinois Democrat.) Based on his conduct in the current hearings on mortgage discrimination, we must rate him at least average as a menace.

[By the way, Dixon's successors in that Senate seat have been Carol Mosley Brown, Peter Fitzgerald, Barack Obama, and Roland Burris.]

The hearings, chaired by Dixon in his role as head of the Senate banking subcommittee on consumer affairs, have been something of a scream. The purpose of the hearings has been quite straightforward: to enable club members to garner headlines by posturing as antidiscrimination stalwarts and yelling at the various federal agencies that monitor all those laws banning bias in mortgage lending. So the agencies -- the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp., and the Office of Thrift Supervision -- were roundly reproved for not detecting the avalanche of mortgage-based bias postulated to be discernible by anybody walking around the block.

Is mortgage bias really a problem? A curious feature of the federal regulatory scene is that long after Congress passed the Equal Credit Opportunity Act and the Community Reinvestment Act (which bars redlining of urban minority population centers), the federal government seems not to generate many complaints of such bias. The regulators' reports indicate that they receive few complaints. And while the U.S. Justice Department has launched hundreds of housing-related antidiscrimination suits during the past 20 years, only a small fraction of them have involved lending practices.

Dixon and the other solons nevertheless took it for granted that bankers have to be prodded on minority mortgage lending. Joining the long line of politicians who claim to know better than businessmen what's good for business, Dixon returned repeatedly to the thought that such prodding always results in higher profits. "It's good business," he burbled at the end of one session. "Everybody makes money."

It is true that federal data show black loan applicants being rejected roughly twice as often as white applicants. But this does not mean blacks are subject to a tougher standard. The higher rate of black rejections might mean that weak black applicants are responding to bank "outreach" programs (as the Office of Thrift Supervision noted). It might mean that black applicants' buildings are on average less attractive as security -- a thought no witness was foolish enough to mention aloud.

A Fed governor did bravely mention a fact of possible relevance: that market forces work against discrimination. John LaWare argued that bankers are in business to make loans and that "the institutional commitment to doing business where it makes economic sense will win out over prejudice." Dixon did not pick up on this thought, plainly not what he came to hear.

But he did get his picture in the Washington Post. Fame beckons.

My published articles are archived at iSteve.com -- Steve Sailer

Seligmania

More from old Fortune "Keeping Up" columns by the late Daniel Seligman. Here's one where using 1980s hardware and software, and inputting data by hand, he did something that hardly any professional journalists could imagine doing today.

December 4, 1989
INCOME AND IDEOLOGY: THE NEW NEXUS

Can it really be? The liberals now draw their support more from the rich than the poor? The Schumpeter effect is already in place? Here we allude to a certain famous proposition originally (1942) put forward in Joseph A. Schumpeter's monumental work Capitalism, Socialism, and Democracy: that market economies contain the seeds of their own destruction. In the course of creating material abundance, they also create masses of wealthy, educated, critically minded people who judge mere wealth production to be beneath them and gravitate naturally to antibusiness attitudes. The capitalist class itself assimilates these attitudes. "It absorbs the slogans of current radicalism," Schumpeter wrote, "and seems quite willing to undergo a process of conversion to a creed hostile to its very existence."

... That question can best be answered by a spreadsheet. So, nervily courting ophthalmia, we keyed in (a) 1980 census data on median family income for each of our country's 435 congressional districts and (b) the 1988 ADA rating for each district's Congressman. On command, Lotus 1-2-3 then proceeded to quantify the relationships between these two sets of data for the entire country and for certain regions.

Blearily eyeballing the data, we conclude that something has indeed changed -- and in the direction forecast by Schumpeter and Ladd. In some regions, there now is a discernible positive correlation between income and liberalism. In New England, for example, the correlation is 0.18. (Positive correlations range from 0 to 1.0.) For Massachusetts alone, it is 0.29.

In some other areas, the old relationships are lingering in place. In the South, the correlation between income and liberalism is still distinctly negative. For the states of the old Confederacy, the coefficient is -0.32, a figure that tells us Southern folks continue to vote their pocketbooks. The same may be said of California, whose 45 districts collectively weighed in at -0.29.

It turns out that these divergent patterns neatly offset each other. Taking the country as a whole, income predicts virtually nothing about the strength of liberal attitudes; the nationwide correlation coefficient is positive but, at 0.05, barely visible. Especially to our own aching orbs.

My published articles are archived at iSteve.com -- Steve Sailer

Are standards of artistic beauty universal?

This is a big question raised by Denis Dutton's book "The Art Instinct," so I'm going to focus just on one small field where I actually kind of know what I'm talking about: golf course architecture. Specifically, are golf courses naturally attractive to a sizable fraction of the male population around the globe? Since they are hugely expensive to build, their sheer existence testifies to that proposition.

The answer is: time will tell. However, I wouldn't be surprised if the look of golf courses proved universally popular by the end of this century. Golf courses, which originated in Scotland, first became popular in the Anglosphere about a century ago. They have since become wildly popular in East Asia (the LPGA tour is now dominated by South Koreans, and you frequently read about Chinese peasants protesting that corrupt local officials have stolen their land to build golf courses), and almost as popular in Western Europe. The oil sheikdoms have built golf courses in the Persian Gulf.

On the other hand, golf has yet to prove terribly popular in Russia, South Asia, black Africa (north of South Africa), or Latin America. I see that mostly as a matter of time and money, but I could be wrong.

By the way, there are two main styles of golf courses: the original links, which emerged out of crumpled, treeless Scottish sand dunes otherwise useful only for grazing sheep, and the sleeker inland American-style courses with tree-lined fairways and lakes.

My impression is that the original style is a bit of an acquired taste. Generally, golfers don't come to appreciate the look of golf courses built on sand dunes until they've some experience with the game. In contrast, the American-style golf course look is frequently imitated for non-golf purposes, such as corporate campuses and rich men's estates.

And then there's the issue, as Dennis Mangan raises in the comments, of changing tastes over time in landscape, from the "beautiful" to the "sublime." From my golf course architecture article:

The distinction Edmund Burke made in 1757 between the "sublime" and the "beautiful" applies to golf courses. The beautiful is some pleasing place conducive to human habitat -- meadows, valleys, slow moving streams, grassland intermingled with copses of trees, the whole English country estate shtick. The sublime is nature so magnificent that it induces the feeling of terror because it could kill you, such as by you falling off a mountain or into a gorge.

Beautiful landscapes are most suited for building golf courses, since a golf course needs close to 100 acres of land level enough for a golf ball to come to rest upon. But golfers get a thrill out of the mock sublime, where you are in danger of losing not your life, but your mis-hit golf ball into a water hazard or ravine. One reason that Pebble Beach on the Monterey Peninsula is so legendary is because it combines sublime sea cliffs with beautiful (and thus functional for golf) rolling plains (My father, though, almost walked off the cliff in the middle of the eighth fairway at Pebble Beach and into the wave-carved chasm, which probably would have satisfied Burke's theoretical rigor.)

My published articles are archived at iSteve.com -- Steve Sailer

February 11, 2009

Dennis Dutton's "The Art Instinct"

Philosopher Denis Dutton, who runs the universally admired Arts & Letters Daily website that highlights three worthy highbrow articles each day, has an excellent new book out called The Art Instinct: Beauty, Pleasure, and Human Evolution.

Dr. Dutton and I have similar tastes in art (although his are broader and better) -- the picture on the cover of his book, Frederick Edwin Church's landscape Heart of the Andes, is hanging (in reproduction, of course) on my living room wall -- and rather similar backgrounds. He pointed out to me that I used to shop at his parents' bookstore in North Hollywood when I was a teenager.

I am pleased to see how much my 2005 American Conservative article on golf course architecture (which Dr. Dutton highlighted on his website back then) influenced his new book's first chapter "Landscape and Longing," which you can read here. In an endnote for his first chapter in The Art Instinct, he was kind enough to call my golf course design article "wonderful."

My published articles are archived at iSteve.com -- Steve Sailer

If lending is really frozen ...

... how come my teenage son keeps getting a couple of offers of preapproved new credit cards each week?

My published articles are archived at iSteve.com -- Steve Sailer

Alex Rodriguez v. Mickey Rourke

The highest paid baseball player, Alex Rodriguez of the New York Yankees, is in the doghouse because his failure to pass a steroid test in 2003 was leaked to the press recently. The Yankees recently gave Rodriguez a huge long-term contract extension because he's on track to eventually surpass Barry Bonds as the all time home run leader, and they figured all the hoopla over a "clean" athlete breaking Bonds's tainted record would provide them with a financial windfall. Some smart strategic thinking there ...

In contrast, Mickey Rourke is the sentimental favorite to win the Best Actor Oscar for his comeback in "The Wrestler," which I review in the upcoming issue of The American Conservative. Rourke, who is either 52 or 56 (sources differ) and stands about six feet tall, upped his weight from 190 to 240 over six months for his role as a pro wrestler. Rourke, who is not the kind of guy to stick to the talking points created by his publicist, has not denied using muscle-building drugs to add mass for the part. And in the past, he has explained that he has an Andrew Sullivan-like prescription from his doctor for testosterone supplementation.

By the way, here's the YouTube of Rourke's star-making three-minute supporting turn as a professional arsonist in 1981's "Body Heat" with William Hurt. (Language NSFW). And here's the trailer from "The Wrestler" 27 years later.

In contrast, 44-year-old Marisa Tomei looks the same in "The Wrestler" as in 1992's "My Cousin Vinny," just with less clothes on in the new movie.

My published articles are archived at iSteve.com -- Steve Sailer

February 10, 2009

You get what you pay for

After Hank Paulson's turn as Treasury Secretary, the conventional wisdom became: We don't need as Treasury Secretaries anymore of these CEOs with 700 million simoleons, a fancy suit, and a firm handshake. We've had enough self-confident blowhards with endless Wall Street connections and conflicts of interest. Instead, we need a ... civil servant! That's right, a career bureaucrat, a regulator. Why didn't anybody think of this before?

So, now, we've got one. He gave his first big speech today to explain his rescue plan, to reassure and stabilize the markets, to impart confidence, to demonstrate there is a strong hand on the tiller. Unfortunately, upon getting a gander at little Timmy Geithner in action -- Noah Millman said he looked like an elf giving a book report -- the markets immediately fainted with the vapors.

The next iteration of the conventional wisdom will probably be that we can't have some wimpy nerd as Treasury Secretary, we need a prime specimen alpha male, a pin-striped powerhouse, a real silverback with a great head of silver hair and a million dollar smile, like ... like former Treasury Secretary John Connally!

Back in 1971, Richard Nixon developed a political crush on the conservative Democrat Connally, a former governor of Texas (who was wounded by Lee Harvey Oswald on 11/22/1963), appointing him Treasury Secretary, and picturing Connally as his heir in 1976. Connally talked Nixon into all sorts of zany adventures, like wage and price controls. When Connally ran for the GOP nomination in 1980, he raised the most money -- corporate CEOs liked his look -- but was obliterated by Reagan. Connally won only one delegate, Ada Mills of Arkansas, who became known as "The $11 Million Delegate."

My published articles are archived at iSteve.com -- Steve Sailer

Politically Correcticizing Darwin

A featured review, "Charles Darwin, Abolitionist," by Christopher Benfey, a professor of English, in the Feb. 1, 2009 New York Times Sunday Book Review asserts:

Two arresting new books, timed to co­incide with Darwin’s 200th birthday, make the case that his epochal achievement in Victorian England can best be under­stood in relation to events — involving neither tortoises nor finches — on the other side of the Atlantic. Both books confront the touchy subject of Darwin and race head on; both conclude that Darwin, despite the pernicious spread of “social Darwinism” (the notion, popularized by Herbert Spencer, that human society progresses through the “survival of the fittest”), was no racist.

Adrian Desmond and James Moore published a highly regarded biography of Darwin in 1991. The argument of their new book, “Darwin’s Sacred Cause,” is bluntly stated in its subtitle: “How a Hatred of Slavery Shaped Darwin’s Views on Human Evolution.” They set out to overturn the widespread view that Darwin was a “tough-minded scientist” who unflinchingly followed the trail of empirical research until it led to the stunning and unavoidable theory of evolution. This narrative, they claim, is precisely backward. “Darwin’s starting point,” they write, “was the abolitionist belief in blood kinship, a ‘common descent’ ” of all human beings. ...

This is getting American intellectual history confused. The polygenetic theory of human origins tended to appeal to Northern intellectuals, while Southerners didn't have much time for it since the Old Testament clearly lays out a monogenetic history of humanity going back to Adam and Eve, with the races being descended from Noah's various sons.

Darwin did spend a number of pages in The Descent of Man considering whether the races were different species before concluding that the different races were, indeed, just different races. If, however, DNA structure co-discoverer James Watson had mentioned in public some of the evidence that Darwin considers on this question, he wouldn't have been fired. He would have been burned at the stake.

(Here's my 1999 article from the National Post of Toronto: "Darwin's Enemies on the Left: Truth v. Equality.")

It's all muddled in Benfey's head because contemporary dogma insists that anyone who believes there are any difference on average between races is in favor of slavery (which then makes stamping out their ideas a moral necessity -- If Charles Murray, say, is not exposed to nonstop hatred and lies, the Slave Trade will automatically be re-initiated.)

Even Darwin’s courtship of Emma, whom he winningly called the “most interesting specimen in the whole series of vertebrate animals,” is cleverly interwoven with his developing thoughts on “sexual selection,” the aesthetic preference for certain traits, like skin color in humans or plumage in peacocks, that over time leads to those super­ficial variations we mistakenly think of as “racial.”

But what if Darwin’s evidence had led to conclusions that did not support his belief in the unitary origins of mankind? Would he have fudged the data? Desmond and Moore don’t really address the question. One is left with the impression that Darwin was amazingly lucky that his benevolent preconceptions turned out to fit the facts.

In his lively and wide-ranging “Angels and Ages,” Adam Gopnik suggests that when facts and values clash we might live in accordance with our beliefs anyway. “It might be true — there is absolutely no such evidence, but it might be true — that different ethnic groups, or sexes, have on average different innate aptitudes for math or science,” he muses. “We might decide to even things out, give some people extra help toward that end, or we might decide just to live with the disparity.” ...

Gopnik is as convinced as Desmond and Moore that Darwin was no kind of racist. “The one thing that you could not read into Darwin’s writings was racism,” he writes.

Have any of these people actually read Darwin's The Descent of Man? If Darwin were alive today, he'd be demonized like James Watson was in 2007. Let's try a few samples:

There is however no doubt that the various races when carefully compared and measured differ much from each other as in the texture of the hair, the relative proportions of all parts of the body, the capacity of the lungs the form, and capacity of the skull, and even in the convolutions of the brain. But it would be an endless task to specify the numerous points of difference The races differ also in constitution in acclimatisation and in liability to certain diseases Their mental characteristics are likewise very distinct chiefly as it would appear in their emotional but partly in their intellectual faculties Every one who has had the opportunity of comparison must have been struck with the contrast between the taciturn, even morose, aborigines of S. America and the light-hearted talkative negroes. Link

Darwin was an IQ hawk before the invention of the IQ test:

The variability or diversity of the mental faculties in men of the same race, not to mention the greater differences between the men of distinct races, is so notorious that not a word need here be said. Link

The influence of Darwin's younger half-cousin, the much denounced Sir Francis Galton, coiner of the term "eugenics" and author of the 1869 book Hereditary Genius, on Darwin's 1871 Descent of Man is evident just from the index of Darwin's book:

Galton Mr on hereditary genius 28 gregariousness and independence in animals 104 en the struggle between the social and personal impulses 125 on the effects of natural selection on civilised nations 133 on the sterility of sole daughters 135 on the degree of fertility of people of genius 136 on the early marriages of the poor 138 on the ancient Greeks 140 on the Middle Ages 141 on the progress of the United States 142 on South African notions of beauty 579 Gammarus use of the chelae of 268

Link

For example:

With man, we see similar facts in almost every family, and we now know through the admirable labours of Mr Galton that genius, which implies a wonderfully complex combination of high faculties, tends to be inherited, and on the other hand it is too certain that insanity and deteriorated mental powers likewise run in families... Link

And here's Darwin sounding like a cross between Galton, Malthus, and Gregory Clark of 2007's A Farewell to Alms:

We will now look to the intellectual faculties; if in each grade of society the members were divided into two equal bodies the one including the intellectually superior and the other the inferior there can be little doubt that the former would succeed best in all occupations and rear a greater number of children. Even in the lowest walks of life skill and ability must be of some advantage, though in many occupations owing to the great division of labour, a very small one Hence in civilised nations there will be some tendency to an increase both in the number and in the standard of the intellectually able. But I do not wish to assert that this tendency may not be more than counterbalanced in other ways, as by the multiplication of the reckless and improvident, but even to such as these ability must be some advantage. ... When in any nation the standard of intellect and the number of intellectual men have increased we may expect from the law of the deviation from an average that prodigies of genius will, as shewn by Mr Galton. appear somewhat more frequently than before Link

Darwin advanced a theory of group selection:

A tribe including many members who, from possessing in a high degree the spirit of patriotism, fidelity, obedience, courage, and sympathy, were always ready to aid one another, and to sacrifice themselves for the common good, would be victorious over most other tribes; and this would be natural selection. At all times throughout the world tribes have supplanted other tribes and as morality is one important element in their success the standard of morality and the number of well endowed men will thus everywhere tend to rise and increase.

Or:

Natural Selection as affecting Civilised Nations -- I have hitherto only considered the advancement of man from a semi human condition to that of the modern savage But some remarks on the action of natural selection on civilised nations may be worth adding This subject has been ably discussed by ... W.K. Greg and previously by Mr Wallace and Mr Galton. Most of my remarks are taken from these three authors. With savages the weak in body or mind are soon eliminated and those that survive commonly exhibit a vigorous state of health We civilised men on the other hand do our utmost to check the process of elimination...

Here's a particularly amusing part of The Descent of Man:

"Or as Mr Greg puts the case: "The careless squalid unaspiring Irishman multiplies like rabbits; the frugal foreseeing self respecting ambitious Scot, stern in his morality, spiritual in his faith, sagacious, and disciplined in his intelligence, passes his best years in struggle and in celibacy marries late and leaves few behind him. Given a land originally peopled by a thousand Saxons and a thousand Celts, and in a dozen generations five sixths of the population would be Celts but five sixths of the property of the power of the intellect would belong to the one sixth of Saxons that remained. In the eternal struggle for existence, it would be the inferior and less favoured race that had prevailed and prevailed by virtue not of its good qualities but of its faults." There are however some checks to this downward tendency ... Link

And Darwin goes on to lay out some Greg Clark-style caveats, but with no apology to the poor Irish.

And how about this?

"The remarkable success of the English as colonists compared to other European nations has been ascribed to their daring and persistent energy, a result which is well illustrated by comparing the progress of the Canadians of English and French extraction; but who can say how the English gained their energy? There is apparently much truth in the belief that the wonderful progress of the United States as well as the character of the people are the results of natural selection for the more energetic, restless, and courageous men from all parts of Europe have emigrated during the last ten or twelve generations to that great country and have there succeeded best. Looking to the distant future, I do not think that the Rev Mr Zincke takes an exaggerated view when he says: "All other series of events as that which resulted in the culture of mind in Greece and that which resulted in the empire of Rome only appear to have purpose and value when viewed in connection with, or rather as subsidiary to, the great stream of Anglo Saxon emigration to the west." Obscure as is the problem of the advance of civilisation, we can at least see that a nation which produced during a lengthened period the greatest number of highly intellectual, energetic, brave, patriotic, and benevolent men would generally prevail over less favoured nations." Link

USA! USA! USA!

On the other hand:

It even appears from what we see -- for instance in parts of S. America -- that a people which may be called civilised, such as the Spanish settlers, is liable to become indolent and to retrograde when the conditions of life are very easy. Link

Ay carumba ...

My published articles are archived at iSteve.com -- Steve Sailer

A better idea

Since the Obama administration doesn't seem to have any good ideas for solving the financial crisis, let me put one of my old ones forward again.

We have two problems:

One, we're a lot poorer than we thought we were two years ago. Only years of hard, smart work are going to get us out of that problem. The most obvious ways government can help are too get off the backs of productive enterprises -- lift anti-discrimination regulations, the more extreme environmental regulations, and the like.

The other problem is something the government might possibly be able to help with. And that is that it's currently prudent to assume there is a high probability that any financial institution you might want to deal with could be broke because their books are black boxes, especially the mortgage-backed securities they own. So, you don't want to invest in them or lend them money because you don't understand their financial position. This uncertainty over the value of financial instruments linked to mortgages can make things even worse than they really are -- All we have to fear is fear itself, etc.

So, it's time for the government to open up the black boxes by requiring all parties to mortgages, mortgage-backed securities, and derivatives tied to mortgage-backed securities to post everything on line. Privacy be damned.

Then, let Wikipedia or something else like that start accumulating information pertaining to the value of each mortgaged property in America: connect to Google Maps street shots, Zillow price estimates, how much comparable homes in the neighborhood are renting for, Census data on local demographics, you name it. This info on each mortgage could then be linked to the mortgage-backed securities that hold slices of that mortgage. From that, informed market prices for mortgage-backed securities (and related derivatives) could emerge.

This process of wide-open public price discovery would no doubt lead to some pretty appalling discoveries about what prices for these financial assets ought to be, but so be it. It's better than not knowing how much gigantic assets are worth.

My published articles are archived at iSteve.com -- Steve Sailer

Obama's bank bailout lays an egg

S&P 500 Index closes down 4.8% after Treasury Secretary waves hands around for awhile.

My published articles are archived at iSteve.com -- Steve Sailer

LA in winter


Yes, that's what it looked like Monday. Granted, I wasn't sitting on my yacht at the marina, but that's the same general view I had from my minivan on the Santa Monica freeway.

My published articles are archived at iSteve.com -- Steve Sailer

February 9, 2009

1990s FHA mortgage default rates by ethnicity



Thanks to reader Tino, who found this HUD document, here are the mortgage default rates by ethnicity for three vintages of 1990s FHA-insured mortgages. The sample size is 240,901 loans.

The Federal Housing Administration insures smaller-sized mortgages of low and moderate income folks upon appraisal, so this is roughly an apples to apples comparison of fairly similar borrowers. In other words, we're not comparing rich whites to poor minorities, at least not as much as if we were looking at the population as a whole.

Moreover, the FHA seems to have been somewhat more responsibly managed than most other sectors of the mortgage industry. And this data is from the 1990s when housing was a more boring sector of the economy than in the 2000s.

So, we're looking at representative, long term ethnic differences.

As you'll recall, late 1992 was when the Boston Fed, under the leadership of Richard Syron, published a warmly welcomed study claiming that mortgage lenders discriminated against minorities and should be loaning more to minorities. As Peter Brimelow asked in Forbes at the time, doesn't that mean minorities should have lower default rates?

But nobody in politics cared, and the study helped Syron get the top job at Freddie Mac, where he earned $38 million while piloting Freddie onto the rocks.

Default rates for 1992 vintage FHA-insured mortgages after 7 years:
White: 4.27%
Black: 10.81%
Hispanic: 13.18%

Default rates for 1994 vintage FHA-insured mortgages after 5 years:
White: 4.10%
Black: 9.14%
Hispanic: 9.47%

Default rates for 1996 vintage FHA-insured mortgages after 3 years:
White: 3.34%
Black: 6.93%
Hispanic: 6.99%

The source is
Analysis of FHA Single-Family Default and Loss Rates
Prepared for:
U.S. Department of Housing and Urban Development
Office of Policy Development and Research
Prepared by:
Robert F. Cotterman
Unicon Research Corporation
March 2004

Even when adjusted for FICO scores and other objective factors related to credit risk, minority default rates still look worse. Cotterman concludes:
Blacks, Hispanics, and those in judicial foreclosure states and underserved areas have higher conditional loss rates, other things the same.

So, the changes in policy and worldview that led to the gigantic increases in mortgage lending to minorities seen over the last decade (with total mortgage dollars written per year increasing 691% for Hispanics and 397% for blacks from 1999 to the peak of the Housing Bubble in 2006) unsurprisingly led to world-historical levels of mortgage defaults in 2007-2009. After all, blacks and Hispanics were still defaulting at very high levels when they weren't getting as much mortgage lending. The law of diminishing marginal returns suggests that throwing more mortgage money at them wasn't going to improve their credit worthiness.

In 2004-2007, minorities received half of subprime mortgage dollars handed out. A new 2008 Boston Fed study shows minorities in Massachusetts getting foreclosed on subprime loans at twice the race of whites, suggesting that minorities accounted for a sizable majority of subprime dollars defaulted.

To the extent that we've had a debate over minority mortgage lending policy in the 18 months since the cratering of the subprime market (which we've barely had at all), it's been along the ideological lines of More Regulation vs. Less Regulation.

And yet, when we look at the federal policy over the last four Presidential terms, what we see is more aptly explained by a different paradigm than Regulation vs. Deregulation:

Who? Whom?

The Clinton Administration both strengthened some mortgage regulations and loosened others, all in the name of increasing minority homeownership. In complete contrast, tThe Bush Administration loosened some regulations and strengthened others, all with the intention of closing the racial homeownership gap.

The results of all this "affordable housing" social engineering was to first make housing unaffordable, and then, when the world finally woke up to the fact that it wouldn't be getting paid back on its mortgage lending, to smash the global economy.

My published articles are archived at iSteve.com -- Steve Sailer

The American media is concerned about violent illegal immigrants' impact ... on Mexico!

From the Chicago Tribune:

Home countries frustrated as U.S. deports criminals
Influx creates challenges for residents, civic groups

JUAREZ, Mexico — When he crossed illegally into the U.S. in 2002, Cesar Sanchez didn't plan on stabbing a girlfriend's estranged husband eight times.

Yet there he was, a convicted murderer dropped at the Texas border last month—one less worry for U.S. officials but a source of concern for the cities in Central America receiving thousands of freed convicts.

"I crossed like so many others; for a dream," said Sanchez, 25, wondering how he'd make it back to his family in Veracruz. "And, then ..."

U.S. Immigration officials are escalating efforts to put some 450,000 illegal immigrants serving prison time in the U.S. on planes back home. In 2008, about 113,000 such convicts were deported.

Perhaps the establishment press should have been more concerned about criminally-inclined foreigners coming to this country in the first place.

My published articles are archived at iSteve.com -- Steve Sailer

LA Times features John Hawks

U. of Wisconsin anthropologist John Hawks's views on accelerating human evolution are written up here by Karen Kaplan in the LAT. Hawks has the mathematical, verbal, and even artistic skills to be a big name in the Human Sciences / Meaning of It All business. But can you do that from Iowa, or do you have to be at Harvard like Stephen Jay Gould and Edward O. Wilson? Steven Pinker said Harvard's a much better base for that than MIT, so where does Wisconsin rank?

My published articles are archived at iSteve.com -- Steve Sailer

I, for one, welcome our new Canadian retiree overlords

Who might buy foreclosed Sand State mcMansions?

The Canadian economy is now being dragged down by the U.S. collapse, but Canadians aren't as burdened by debt as Americans are. The Canadian government has been running surpluses, and there wasn't much of a housing bubble up there. There are a lot of Canadian baby boomers reaching retirement age, and the idea of buying or renting a cheap winter home in California, Nevada, Arizona, or Florida has to sound appealing.

My published articles are archived at iSteve.com -- Steve Sailer

February 8, 2009

Flynn: Flynn Effect has reversed among British teens

For several years, I've been pointing out that something is going wrong with the British, at least among younger British males. And it's not just immigration -- the white working class in Britain has become a lot drunker and more petty crime-inclined than their distant cousins in the U.S. white working class. And the British upper classes are dropping their traditional elite interests for the same prolefeed -- the telly, footer, and binge-drinking -- as the lower orders.

From the London Telegraph:

British teenagers have lower IQs than their counterparts did 30 years ago
Teenagers in Britain have lower IQ scores than their counterparts did a generation ago, according to a study by a leading expert.

Tests carried out in 1980 and again in 2008 show that the IQ score of an average 14-year-old dropped by more than two points over the period.

Among those in the upper half of the intelligence scale, a group that is typically dominated by children from middle class families, performance was even worse, with an average IQ score six points below what it was 28 years ago.

The trend marks an abrupt reversal of the so-called "Flynn effect" which has seen IQ scores rise year on year, among all age groups, in most industrialised countries throughout the past century.

Professor James Flynn, of the University of Otago in New Zealand, the discoverer of the Flynn effect and the author of the latest study, believes the abnormal drop in British teenage IQ could be due to youth culture having "stagnated" or even dumbed down.

He used data gathered in IQ tests on UK children to examine how the country's cognitive skills have changed over time.

He found that while children aged between five and 10 saw their IQs increase by up to half a point a year over the three decades, teenagers performed less well.

"It looks like there is something screwy among British teenagers," said Professor Flynn. "While we have enriched the cognitive environment of children before their teenage years, the cognitive environment of the teenagers has not been enriched.

"Other studies have shown how pervasive teenage youth culture is, and what we see is parents' influence on IQ slowly diminishing with age.

"Up until the age of nine and ten, the home has a really powerful influence, so we can assume parents have been providing their children with a more cognitive challenging environment in the past 30 years.

"After that age the children become more autonomous and they gravitate to peer groups that set the cognitive environment.

"What we know is that youth culture is more visually orientated around computer games than they are in terms of reading and holding conversations."

He added that previous studies have shown that IQ increases as teenagers move into adulthood, entering university or starting work.

Professor Flynn also believes that the larger drop in IQ among the upper half of the ability range could be due to effects of social class.

He said: "IQ gains are typically correlated by class, but the results in this case are very mixed. Maybe the rebellious peer culture of the lower half of British society has invaded the peer culture of the upper half.

"It could be the classes in the upper half were insulated from this rebellious peer culture for a time, but now it is universal."

His research, which is presented in a paper published online by the journal Economics and Human Biology, also refutes the commonly held belief that increases in IQ over time are a result of improving nutrition. [Well, British teenagers in 1980 were pretty well-fed compared to 2008, so I don't think you should generalize from these two data points to rule out nutritional improvements as raising IQ in other times and places.] ...

Professor Flynn's study was conducted using a respected IQ test known as Raven's Progressive Matrices. Questions involve matching a series of patterns and sequences, so that even people with no education can take the test.

(By the way, here's my review of Jim Flynn's last book, What Is Intelligence: Beyond the Flynn Effect, which Flynn liked a lot.)

My published articles are archived at iSteve.com -- Steve Sailer

My review of "The 10,000 Year Explosion"

Here's the opening:

This Thursday, February 12, 2009, marks the 200th anniversary of the birth of Charles Darwin, author of the 1859 book On the Origin of Species by Means of Natural Selection: Or The Preservation of Favoured Races in the Struggle for Life.

(I guess Darwin didn’t get the memo about race not existing. You’ll see vast heapings of praise in the press for Darwin this week. Keep in mind, though, that if he were alive today, the same people now lauding the dead Darwin would be denouncing the living one the same way they demonized James Watson in 2007.)

I’m pleased that a new book, The 10,000 Year Explosion: How Civilization Accelerated Human Evolution, demonstrates that Darwin has two worthy 21st Century successors of comparable insight and ambition: co-authors Gregory Cochran and Henry Harpending. (They’ve set up an official website for The 10,000 Year Explosion here).

On a rather less epochal note, the publication of The 10,000 Year Explosion marks the tenth anniversary of my invitation-only Human Biodiversity email group, which I started in 1999.

And that’s where Greg and Henry got to know each other! Peter Brimelow recently called to my attention that the inscription on the Westminster Abbey tomb of concert impresario J.P. Salomon reads, "He brought Haydn to England …" Perhaps my gravestone will read, "He introduced Cochran to Harpending."

Henry Harpending, a professor at the University of Utah and member of the National Academy of Sciences, is one of the few field anthropologists (he lived for 42 months with hunter-gatherer peoples in Africa, such as the tongue-clicking Bushmen) with the mathematical skills to grapple with the current deluge of genetic data.

(Here’s Henry’s hair-raising tale of going hunting with Bushmen for the most lethal African game animal, the Cape buffalo.)

Greg Cochran, a physicist turned evolutionary theorist, is a polymath who might be the most ferociously brilliant idea man of his generation in America.

Obviously, I’m biased about their The 10,000 Year Explosion. Over the last decade, I’ve spent perhaps a thousand hours talking to Greg Cochran on the phone. Or, to be more accurate, listening to Greg, which is how I’ve gotten a sizable fraction of my best ideas. (My worst ideas are all mine.)

Cochran the conversationalist is at his acerbic best in a five part interview on the 2Blowhards blog: Day 1, Day 2, Day 3, Day 4, and Day 5.

On the first page of The 10,000 Year Explosion, Cochran and Harpending quote the reigning conventional wisdom about humanity:

"There’s been no biological change in humans in 40,000 or 50,000 years. Everything we call culture and civilization we’ve built with the same body and brain." Stephen Jay Gould

The co-authors then announce that they will undermine this standard presumption:

"We intend to make the case that human evolution has accelerated in the past 10,000 years, rather than slowing or stopping, and is now happening about 100 times faster than its long-term average over the 6 million years of our existence. The pace has been so rapid that humans have changed significantly in body and mind over recorded history. Sargon and Imhotep were different from you genetically as well as culturally."

As Greg quips, "The past may never be the same again."

More here.

My published articles are archived at iSteve.com -- Steve Sailer