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The Fed’s $3.5T QE purchases have generated almost half a trillion dollars for the US Treasury since 2009
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The Federal Reserve just released its annual income statement for 2014, including details on its annual distribution of “residual earnings” to the US Treasury. Last year the Fed earned net income of $101.5 billion, primarily from “$115.9 billion in interest income on securities acquired through open market operations (U.S. Treasury securities, federal agency and government-sponsored enterprise (GSE) mortgage-backed securities (MBS), and GSE debt securities). Note that “acquired” means that the Fed was able to purchase about $474 billion in securities last year in its “open market operations” without any real assets, deposits or money, bringing its total portfolio of securities “acquired” to $4.236 trillion at year end 2014, see red line in chart above. The “acquisition” of $4.236 trillion in marketable securities was mostly the result of the Fed’s monetary expansion known as QE1, QE2 and QE3 that started in 2008 in response to the Great Recession. At the end of 2007, the Fed held “only” about $750 billion in Treasury securities, which then grew to a portfolio of almost $4.25 trillion by December 2014 after the Fed “acquired” almost $3.5 trillion in Treasury securities ($1.7 trillion in purchases from 2008 to 2009) and mortgage-back securities ($1.75 trillion from 2009 to 2014).
That’s how expansionary monetary policy (including QE) works – the Fed uses what I call its “magic check book” to purchase securities in the open fixed-income market by writing checks to individuals, organizations and/or financial institutions on an account that has no funds. If a private party tries to acquire assets that way, it’s called check forgery, writing a bad check, or bank fraud; when the Fed does it, it’s called “monetary policy” or “open market operations” or “acquiring securities” or “QE.”
On its $4+ trillion portfolio of fixed-income securities, the Fed earned an average interest rate of about 3%, which generated the $116 billion of interest income last year for the Fed. To provide context for that amount of interest income, consider that all nearly 7,000 FDIC-insured US banks together earned only $116 billion in net income during the first three quarters of 2014, and will probably end up with about $155 billion in net income for the whole year.
After accounting for operating expenses and other costs (currency issue, interest expenses, dividends, etc.), the Fed paid “residual earnings” to the US Treasury last year of $98.7 billion, see blue bars in chart above. That annual Fed distribution to the Treasury was the largest ever, and brings the total amount distributed since QE started in 2008 to almost half a trillion dollars — $469 billion in the six years from 2009 to 2014.
That was a point made today by the WSJ in its staff editorial “The Fed Cash Machine,” which pointed out that QE has made the Fed’s annual distribution of “residual earnings” a significant revenue source for the US Treasury:
For perspective, the entire federal budget deficit for fiscal 2014, which ended in September, was $483 billion. Without the Fed’s windfall, it would have been nearly $100 billion more. Corporate income tax revenue in 2014 was $321 billion, so the Fed turned over nearly 30% of the amount provided by every American corporation.
Treasury is spending the Fed’s windfall, naturally, which means that when the QE boom ends the country will have to spend that much less or find the revenue somewhere else. The danger is that politicians are getting used to the money, which is one more reason for the Fed to begin winding down its balance sheet sooner rather than later.
Bottom Line: While the record transfer of almost $100 billion from the Fed to Treasury last year has gotten some media attention, what hasn’t been reported, except by the WSJ today is this: The monetary expansions known as QE1, QE2, and QE3 ended up being a gigantic transfer of wealth from the private sector to the public sector. By “acquiring” almost $3.5 trillion in assets with a “magic checkbook” that were previously held largely by private investors and the private sector, those trillions of dollars in Treasury and MBS securities, along with the billions of dollars in interest income those securities generate, got transferred to the Fed, which has then transferred almost half a trillion dollars in residual interest earnings to the US Treasury in the last six years.
Q: Is that fair/accurate to describe QE1, QE2 and QE3 — as monetary policies that ultimately transferred billions of dollars in private wealth to the US Treasury via the Fed? Or is it more accurate to describe it as printing money to finance the government’s budget deficit disguised to look like monetary policy, since the bond holders got paid for their securities? (Thanks to Jeff Dorfman for help with that second description.)
Update 1: Or here’s how Jon Murphy describes it in an email: “The Fed is just printing money and giving it to the Treasury but ‘laundering’ it through bonds.”
Update 2: Another way to think of the Fed’s $3.5 trillion acquisition of assets through QE1, QE2 and QE3 is to view the Fed as the “world’s largest hedge fund” — see posts by Scott Grannis here and here for details.
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…. is from the editorial pages of today’s Wall Street Journal (“The ObamaCollege Plan”):
The new entitlement [“free” community college] is best understood as an extension of the Administration’s ideological project to add higher education to the list of entitlements that keep the federal government in charge of American life from cradle to grave…… The ObamaCollege plan is everything we’ve come to expect from this White House.
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No one has more steadfastly, consistently and vigorously brought economy sanity, logic and reason to the issue of the minimum wage law government-mandated wage floor that guarantees reduced employment opportunities for America’s teenagers and low-skilled workers (especially minorities) than George Mason University economics professor Don Boudreaux. On his Café Hayek blog, Don has for many years regularly covered the minimum wage issue with his wisdom, wit, and keen economic thinking, and I applaud his ongoing efforts to educate his readers, students and (hopefully, some day maybe) policymakers about an important economic issue.
In several recent posts, Don has emphasized a very important, but usually overlooked or neglected reason that some empirical studies fail to find negative employment effects following increases in the minimum wage government-mandated wage floor that guarantees reduced employment opportunities for America’s teenagers and low-skilled workers (especially minorities). That reason has to do with the fact that the minimum wage has been in effect for almost 80 years since the Fair Unfair to Unskilled Labor Standards Act was passed in 1938, and it’s been increased 27 times since then. Therefore, the government’s mandated market-suppressing, artificial wage for low- and un-skilled workers has been around for such a long time, and it’s been raised so many times, that the distortionary effects of the minimum wage have long ago been “internalized” by employers who hire unskilled workers. Don explains that phenomenon in a recent blog post where he schools Washington Post columnist Steven Pearlstein about his “simply poor economic journalism,” and provides this additional commentary:
Empirical studies today of the effects of changes today in the minimum wage are biased against finding negative employment results because many of the negative results of minimum-wage legislation have long ago been ‘internalized’ into the economy due to the fact that the minimum wage has been in existence in the U.S. for almost 80 years.
It would be like empirically studying today the effects of a recent rise in the minimum-allowed price of strawberries if strawberries had long ago been made unnecessarily pricey by minimum-strawberry-price legislation. Consumers would long ago have switched their diets away from strawberries; chefs would long ago have begun concocting fewer desserts and recipes with strawberries and more with other fruits and berries. Other ingredients would have become staple substitutes for strawberries in consumers’ diets and in chefs’ dishes and recipes. Farmers, in turn, would have – despite the formal, legislated higher list price for strawberries – either totally abandoned or significantly abandoned strawberry production. Many producers who would otherwise, in the absence of the minimum-strawberry-price legislation, grown and sold strawberries, wind up more and more as the years pass producing other berries that are not burdened with price controls. So when an empirical study is done of the effect on strawberry sales of, say, a 10 percent or even of a 100 percent hike today in the minimum price of strawberries, the detected empirical effects will underrepresent the full depressing impact that a legislated minimum price of strawberries has on the market for strawberries.
In other words, we would expect a huge difference in the possible, detectable negative employment effects between: a) the highly likely, inevitable 28th increase in the federal minimum wage from $7.25 to $10.10 per hour (or something close to that) in the next few years, the effects of which have already been internalized and incorporated into business and staffing decisions over the last 80 years, and b) the imposition for the first time of a government-mandated minimum wage of $10.10 per hour, which didn’t follow 27 previous increases over almost 80 years.
It’s also important to note that increases in the federal minimum wage follow years of highly publicized debate and are therefore fully anticipated by employers well in advance of the actual implementation of a minimum wage hike. For example, the current proposal to raise the minimum wage to $10.10 per hour came from President Obama in his January 2014 State of the Union address. Assuming that a $10.10 per hour minimum wage will likely eventually become a reality, it might be another year or more before it will take effect, giving employers several years of advance notice that a higher minimum wage is inevitable, and giving them incentives to prepare today for the inevitable 39% increase in their labor costs for unskilled workers. Those preparations might include investing today in labor-saving technologies like robots and self-ordering kiosks that McDonald’s and other restaurants are introducing to replace cashiers and servers.
Therefore, Don highlights an important point that the distortionary effects of government-mandated price controls on unskilled labor markets have been internalized by employers for so long, along with the fact that future labor market distortions are so widely anticipated well in advance, that empirical studies will be generally biased against finding negative employment effects of new minimum wage increases.
Don made his case that employers have had almost 80 years to adjust to the distortionary effects of government price controls on unskilled labor in a letter to the Washington Examiner on December 9, 2014:
Jason Russell nicely summarizes the much-discussed new study that finds that raising the minimum wage destroys jobs for many low-skilled workers (“New evidence that the minimum wage kills jobs,” Dec. 9). Yet even this careful study underestimates the damage that minimum-wage legislation inflicts on the job prospects of the unskilled.
Employers in the U.S. have now had 76 years to adjust to the existence of this regulation that makes unprofitable the hiring of the lowest-skilled workers. One result is that business and labor practices that would have employed legions of low-skilled workers in the absence of a minimum wage were either long ago snuffed out or never created. Empirical studies today, therefore, can at best detect only changes in employment at existing firms that use existing business practices – firms and practices that, having evolved in an economic environment with a minimum wage, were never suited to employ as many low-skilled workers as would be employed by businesses that evolved in an environment without a minimum wage.
Raising the existing minimum wage does indeed destroy some jobs. But even the most accurate measurements of today’s job destruction offer no clue to the full magnitude of the vast amount of economic opportunities that the minimum wage denies to the poor and unskilled.
Another important point: Why do some retailers actually support raising the minimum wage? Is it out of compassion and concern for unskilled and low-skilled workers? Or could it be in their self-interest to raise labor costs disproportionately on some of their competitors because those apparently “compassionate” retailers are already paying their workers wages that are above the federal minimum?
In a letter to the WSJ on January 7, 2015 (“Suspect Retail Motive On Minimum Wage”) Don explains why “there’s something suspicious about some retailers pleading with government to force all employers to raise wages”:
Labor Department official David Weil justifies his support for raising the minimum wage in part by recounting that the majority of retailers he met at a National Retail Federation conference pleaded with him to raise the minimum wage (“Wage-Law Enforcer Favors Proactive Approach,” Dec. 31).
Such pleading by some retailers for a higher minimum wage is not as clear a sign as Mr. Weil would have us believe of the wisdom of raising that wage. For starters, every retailer is free to raise its wages on its own. And because raising its wages when other employers don’t allows the wage-raising firm to attract a larger and better pool of employees than it attracts when all firms raise wages, there’s something suspicious about some retailers pleading with government to force all employers to raise wages.
I have a good idea what that something is. The retailers who begged Mr. Weil for a higher minimum wage likely have wage scales well above the industry norm; they rely less intensely than do their competitors on minimum-wage workers. Raising the minimum wage, therefore, would impose heavier burdens on their competitors than on themselves. Mr. Weil’s retailer friends thus see a hike in the minimum wage as a way for government to artificially improve their profitability by bankrupting, or at least throttling, many of their rivals.
Bottom Line: Kudos to Don Boudreaux for his ongoing and tireless efforts to regularly expose the numerous flaws of the minimum wage law government-mandated wage floor that guarantees reduced employment opportunities for America’s teenagers and low-skilled workers (especially minorities, see chart below).
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2014 was a very interesting year for gender-related issues that included former White House press secretary Jay Carney struggling (squirming?) at a press conference in April to defend the 13% gender pay gap at the White House at a time when Obama was busy signing two executive orders concerning fair pay for women working for federal contractors, a perennial debate about how much gender discrimination contributes to the unadjusted 23% gender pay gap nationally, a media frenzy about an alleged campus sexual assault/rape epidemic, an op-ed about the “supposed campus epidemic of rape” by George Will that stirred up a national controversy and elicited a response from four Democratic senators and resulted in Will’s syndicated column being dropped by the St. Louis Post-Dispatch, and a horrific, but later discredited, report in Rolling Stone magazine about a gang rape of a female University of Virginia student by seven different men in a fraternity house while the victim was lying on shards of glass. To help summarize last year’s top gender-related stories, I present here my Top Ten Gender Charts of the Year for 2014.
1. US Rape Rate. In November of last year, the FBI released its final report on crime statistics in the United States for 2013, and the chart above shows the rate of rape in the US per 100,000 inhabitants annually from 1973 to 2013. Remarkably, despite all of the media reports about a “rape epidemic” in the US, especially on college campuses, the rape rate fell to a 40-year low in 2013 at 25.2 cases per 100,000 persons (about 1 for every 4,000 persons) — the lowest rate since 1973, and more than 40% below the peak rate of 42.8 rapes per 100,000 persons in 1992.
How much media attention did the decline in the US rape rate to a 40-year low in 2013 generate? If you answered “none,” that would almost be an overstatement. A Google search of the millions of articles and documents available on the Internet for the phrase “falling U.S. rape rate” incredibly finds not a single result. A search for the term “falling rape rate” yields only four results from all of the millions of documents available. Now try a Google search for “rising rape rate” or “rape epidemic” and you’ll get almost 5,000 and more than 100,000 results, respectively. So much for fair and balanced reporting and media coverage on the historic decline in the US rape rate to a 40-year low in 2013.
2. Department of Justice Report on Rape/Sexual Assault of Young Females. The Department of Justice (Bureau of Justice Statistics) released a report in December titled “Rape and Sexual Assault Victimization Among College-Age Females, 1995–2013.” The report was based on the National Crime Victimization Survey of women ages 18-24 for both reported and unreported cases of rape and sexual assault. Rape and sexual assault include: a) completed and attempted rape, b) completed and attempted sexual assault, and c) threats of rape or sexual assault, so the study provides a pretty comprehensive analysis of rape and sexual assault among young women. The report includes both: a) students (enrolled in college, university, trade school, or vocational school) and b) nonstudents for the 18 to 24 age group, which allows for a comparison of “campus rape/sexual assault” and offenses that take place for that age group among nonstudents. Here are some of the report’s findings:
a. Over the 1995-2013 period, the rate of rape and sexual assault victimization was almost 25% higher for nonstudents ages 18-24 (7.6 cases per 1,000 females) compared to students enrolled in a post-secondary institution in that age group (6.1 cases per 1,000 females), see chart above. So despite all of the media attention on campus sexual assault, women enrolled in colleges and universities are actually significantly safer compared to women in that age group who are not attending a post-secondary institution.
b. Over the 1995-2013 period, the rate of rape and sexual assault victimization for both students and nonstudents has been falling (see chart). For women attending college, the rate of rape/sexual assault has fallen by more than 50% over the last several decades, from 9.2 incidents per 1,000 women in 1997 to 4.4 cases per 1,000 in 2013. According to the media, politicians and gender activists, there is supposed to be a college “rape epidemic” when in fact, the rate of college female victimization has been trending downward for almost 20 years (consistent with the decline in overall US rape rate shown above in the first chart).
3. About 1 in 52 College Women Have Been Victims of Sexual Assault or Rape. What might be the most important statistic in the December DOJ report (and was not actually provided in the report and was not reported by the mainstream media) is that the data reveal that only about 1 in 41 women were victims of rape or sexual assault (threatened, completed and attempted; and reported and unreported) while in college for four years during the entire period investigated from 1995 to 2013, based on this analysis:
6.1 women per 1,000 = “1 in 163.9 women” per year, and over four years attending college would then be = “1 in 41 women” while in college. Because the victimization rate has been trending downward, that same analysis using data from the last four years (2010 to 2013) reveals that 1 in 52.6 women have been sexually assaulted or raped in recent years (see table above).
Those recent DOJ findings contradict the repeated claims made in the media and by the White House that “1 in 5 women has been sexually assaulted while in college,” based on the questionable results from a DOJ-funded web-based survey of 5,400 college women in 2006 at two undisclosed, large public universities. Another DOJ-funded study, quoted frequently by the White House and media, found that “on average only 12% of student victims report the assault to law enforcement.” As George Will pointed out in his controversial June op-ed (based on my analysis of Ohio State crime data, highlighted in the next item below): “Simple arithmetic demonstrates that if the 12% reporting rate is correct, the 20% assault rate is preposterous.” That is, actual campus crime statistics demonstrate that either the actual reporting rate has to be much, much lower than 12% to mathematically support the 20% assault rate, and/or the actual assault rate has to be much, much lower than 20% to mathematically support the 12% reporting rate assumption. See below for further discussion and analysis.
4. If 12% of Campus Sexual Assaults at Ohio State Are Reported, Then the “1 in 5″ Claim Can’t Possibly Be True Mathematically. As mentioned above, the two assumptions publicized extensively by the White House and the media: a) 1 in 5 women is sexually assaulted while in college and b) only 12% of college women report the assault to law enforcement, can’t both simultaneously be true and are in fact mathematically contradictory when actual college crime data on sexual assaults are analyzed.
For example, over the most recent four-year period from 2010 to 2013, there were 104 cases of “forcible sexual offenses” reported to the Ohio State University’s (OSU) Department of Public Safety, which included incidents that allegedly took place on campus, in university residence halls, on non-campus properties including fraternity and sorority houses, and on public property adjacent to or accessible from the campus. Using the White House claim that only 12% of campus sexual assaults get reported, there would have been 763 unreported forcible sexual offenses at OSU during that period, bringing the total number of sexual assaults (reported + unreported) to 867 (see table above).
The Columbus campus of OSU has a total female student population of about 28,000. Dividing the total 867 estimated sexual assaults (104 reported and 763 unreported) over the most recent four-year period into the 28,000 OSU female students would mean that only 3.1% of OSU women, or about 1 in 32.3, would be sexually assaulted while attending college. Certainly that’s still too high, but not even close to the White House claim that one in five (and 20% of) female students are sexually assaulted while in college.
From similar analyses of campus crime statistics, I showed last year that the rate of sexual assault at various major colleges was: University of Florida (1 in 79), University of Wisconsin (1 in 20), University of Texas (1 in 39), University of Michigan (1 in 18.5) and the University of California-Berkeley (1 in 32).
5. For the “1 in 5″ Claim to Be True at OSU, What Percent of Campus Sex Offenses Would Go Unreported? Continuing with OSU campus crime data, we could ask the question: For the “1 in 5 women” claim to be true, what level of under-reporting would support that claim based on the actual reported assaults over the last four years? If one of every five of OSU’s 28,000 female students had been sexually assaulted during the four years from 2010 to 2013, there would have been 5,600 sexual assaults during those four years – an average of 1,400 sexual assaults every year and almost 4 every single day of the year. For that to be true, fewer than 2% of the actual sexual assaults would have been reported, and more than 98% would have to go unreported as the analysis above shows. Further, that rate of sexual assaults on women at OSU and other colleges (5% per year) would mean that the violent crime rate on college campus is significantly worse than the most crime-ridden cities in America like Detroit, where the violent crime rate for rapes AND murder, robberies and assaults was only 2.1% in 2013!
If we’re to believe the “1-in-5″ claim, then we’d have to wonder and explain why parents continue to send their daughters in record numbers to college campuses that have a higher violent crime rate than some of the worst crime-infested neighborhoods in cities like Detroit. Most of those parents wouldn’t even drive through certain sections of Detroit during the day, but they’ll send their daughters to live on college campuses for four years with violent crime rates that are even higher than the Motor City? If you don’t believe that college campuses are more dangerous than Detroit, then you can’t believe the “1 in 5″ claim.
6. Gender Pay Gap at the White House. The White House released its annual report in early July last year with detailed salary data for the 454 employees who work on the White House staff. My analysis of the 2014 White House Staff Salaries revealed the following (summarized in the chart above):
a. The 230 female White House staffers earned a median salary of $65,650 last year.
b.The 224 male White House staffers earned a median salary of $75,750 last year.
Bottom Line: Using median 2014 White House salaries, female staffers earned 86.7% of the median salary for men last year, or 86.7 cents for every $1 men earn. That would mean that there is currently a 13.3% gender pay gap at the White House. If Obama applied his typical approach of comparing aggregate (median) salaries to detect discrimination (“Women are paid 77 cents on the dollar for doing the same work as men.“), he would have to admit that the 13.3% gender pay gap reflects gender discrimination at the White House. Alternatively, if a 13.3% gender pay gap at the White House can be explained by factors other than discrimination, Obama, feminists, gender activists, and progressives should stop using aggregate salary statistics to lecture us about a gender pay gap crisis at the national level.
7. Occupational Fatalities by Gender. Every year the National Committee on Pay Equity (NCPE) publicizes its “Equal Pay Day” to bring public attention to the gender pay gap. “Equal Pay Day” last year fell on April 14, and allegedly represents how far into 2014 the average woman had to continue working to earn the same income that the average man earned in 2013. Inspired by Equal Pay Day, I introduced “Equal Occupational Fatality Day” in 2010 to bring public attention to the huge gender disparity in work-related deaths every year in the US. “Equal Occupational Fatality Day” tells us how many years into the future women would be able to work before they experienced the same number of occupational fatalities that occurred in the previous year for men.
The Bureau of Labor Statistics (BLS) released new data last September on workplace fatalities for 2013, and I was able to then calculate a new “Equal Occupational Fatality Day.” As in previous years, the chart above shows the significant gender disparity in workplace fatalities in 2013: 4,101 men died on the job (93.1% of the total) compared to only 302 women (6.9% of the total). The “gender occupational fatality gap” in 2013 was considerable — nearly 14 men died on the job last year for every woman who died while working.
Based on the new BLS data, the next “Equal Occupational Fatality Day” will occur more than ten years from now – on July 31, 2025. That date symbolizes how far into the future women will be able to continue working before they experience the same loss of life on the job that men experienced in 2013 from work-related deaths. Because women tend to work in safer occupations than men on average, they have the advantage of being able to work for more than a decade longer than men before they experience the same number of male occupational fatalities in a single year. To achieve equal pay, do women really want equal representation in the most dangerous occupations (logging, mining, farming, fishing, correctional officers, fire fighter, etc.) if that means that thousands of women will be killed or injured every year while working?
8. 2014 SAT Math Test Scores by Gender. The College Board released 2014 SAT college-entrance test results in October and confirmed a continuing and uninterrupted trend that dates back to at least 1972 — high school boys outperformed girls on the 2014 SAT math test with an average score of 530 points compared to the average score of 499 for females, see chart above. The statistically significant 31-point male advantage last year on the SAT math test is one point lower than the 32-point difference in 2013, and just slightly below the 34 point difference over the last two decades favoring boys. In terms of percentile ranking, the average test score for male high school students (530) last year represented the 55th percentile of all students. By comparison, the average female test score (499) was slightly below the 45th percentile ranking for all students .
9. 2014 SAT Math Test: Male-Female Ratios by Test Score. Claims have been made by economist and former Harvard University president Larry Summers and others that men have historically out-performed women at the very high end of mathematical aptitude (2-3 standard deviations above average) and the SAT math test results in 2014 confirm that claim. Male students outnumbered female students for all 2014 math SAT scores of 590 (73rd percentile) and above, and those outcomes are represented in the chart above by all of the blue bars higher than the 1.0 Male:Female ratio (red line). As SAT math scores increased by 10-point intervals from 590 to 800, the male-female ratio gradually increased, reaching a peak male-female ratio of slightly more than 2-to-1 for perfect test scores of 800. At the highest level of math performance on the SAT test last year, there were 203 males achieving perfect scores for every 100 females. Maybe that explains why men are over-represented in highly quantitative degree programs and careers like computer science, engineering, chemistry and physics?
Despite the clear and convincing statistical evidence from the math SAT test results by gender, gender activists like Professor Janet Hyde at the University of Wisconsin continue to claim that “There just aren’t gender differences anymore in math performance.” The SAT math test results for 2014 and for every year since 1972 suggest otherwise and “beg to differ,” Professor Hyde.
10. College Classes of 2014. Women have been phenomenally successful in higher education, and have earned a majority of associate’s degrees in every year since 1972, a majority of bachelor’s degrees in every year since 1982, a majority of master’s degrees in every year since 1986 and a majority of doctor’s degrees since 2006, according to Department of Education data. For the graduating college classes of 2014, women continued to dominate highest education at all levels, and the growing college degree gap in favor of women was reflected by the fact that women earned almost 62% of associate’s degrees last year, almost 57% of bachelor’s degrees, nearly 60% of master’s degrees, and more than half of doctor’s degrees. Department of Education forecasts suggest that the college degree gap will continue to widen, see estimates above for the College Class of 2022.
Given the college degree gap that reflects the reality that women have been amazingly successful in higher education to the point that men have now become the “second sex,” wouldn’t you think that feminists and gender activists would declare victory and direct their attention to other issues? Well, that’s apparently not exactly how gender activism and the grievance/victim movement work, here’s a statement from former Chancellor Ruth Person at the University of Michigan-Flint in March 2014 that led to the creation of a new Women’s Commission:
At our campus, more than 60 percent of our employees and students are women. It would seem appropriate, given this demographic, that we begin to focus additional attention on the roles women play on and off our campus and how we might enhance future opportunities for leadership and success. The University of Michigan Flint Women’s Commission … will regularly report on the status and needs of women on campus, identify areas of strength and limitation, and provide recommendations that will sustain and enrich our ability to attract and support the most dynamic women leaders. The commission will recommend policies, practices and procedures that strengthen our ability to attract, support, and develop women students, staff and faculty.
So here’s my understanding of the twisted “logic” of feminists/gender/grievance activists: When women are a minority and are under-represented for outcomes like: college enrollment (back in 1950s, 1960s and 1970s), STEM degrees (except biology), and serving on corporate boards, resources must be mobilized to address the under-representation of women. But when women are in the majority like at UM-Flint where women out-number men earning bachelor’s degrees by a ratio of 2:1, the super-majority status of women also motivates the mobilization of resources to further strengthen the institution’s ability to “attract, support and develop women students”? Wouldn’t simple logic suggest that when 200 women earn bachelor’s degree from an institution for every 100 men that the “status and needs” of women are already being met quite successfully, and that no additional taxpayer-funded resources are needed to strengthen UM-Flint’s “ability to attract, support and develop” a group that already maintains a super-majority status?
Why is fracking one of the most important innovations of the century and why could it only happen in America?
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In the Wall Street Journal a few weeks ago, Bret Stephens answers those questions in his excellent article “The Marvel of American Resilience“:
The [fracking] revolution happened in the U.S. not because of any great advantage in geology—China, Argentina and Algeria each has larger recoverable shale gas reserves. It didn’t happen because America’s big energy companies are uniquely skilled or smart or deep-pocketed: Take a look at ExxonMobil ’s 2004 Annual Report and you’ll barely find a mention of “fracturing” or “horizontal” drilling.
Nor, finally, did it happen because enlightened mandarins in the federal bureaucracy and national labs were peering around the corners of the future. For the most part, they were obsessing about the possibilities of cellulosic ethanol and other technological nonstarters.
Instead, fracking happened in the U.S. because Americans, almost uniquely in the world, have property rights to the minerals under their yards. And because the federal government wasn’t really paying attention. And because federalism allows states to do their own thing. And because against-the-grain entrepreneurs like George Mitchell and Harold Hamm couldn’t be made to bow to the consensus of experts. And because our deep capital markets were willing to bet against those experts.
“When I talk to foreigners, they’re even more impressed than many Americans by this renaissance,” says my Journal colleague Gregory Zuckerman, author of “The Frackers.” “They understand that it only could have happened in America.”
Fracking has now upended energy markets, pummeled petrodictators, confounded OPEC, forged deeper North American economic ties, slashed U.S. greenhouse-gas emissions to their lowest level since 1995, and sunk a nail into the coffin of most renewable-energy schemes (though there will be no slaying that zombie, as our future historian would also know).
Fracking is one industry. In time, the advantages it has given the U.S. will fade as the technology is more widely disseminated. Then it will be on to the next thing. Which, it is safe to say, will also be of American origin and design.
Bret also offers some keen observations about the “American secret” for success in the world marketplace for ideas, innovation, and cutting-edge technologies (most of which are “Made in the USA”):
Innovation depends less on developing specific ideas than it does on creating broad spaces. Autocracies can always cultivate their chess champions, piano prodigies and nuclear engineers; they can always mobilize their top 1% to accomplish some task. The autocrats’ quandary is what to do with the remaining 99%. They have no real answer, other than to administer, dictate and repress.
A free society that is willing to place millions of small bets on persons unknown and things unseen doesn’t have this problem. Flexibility, not hardness, is its true test of strength. Success is a result of experiment not design. Failure is tolerable to the extent that adaptation is possible.
This is the American secret, which we often forget because we can’t imagine it any other way. It’s why we are slightly shocked to find ourselves coming out ahead—even, or especially, when our presidents are feckless and our policies foolish.
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….. is from Kevin Williamson writing in National Review Online:
The aggregate effect of competitive capitalism is indistinguishable from magic, but we are so used to its bounty that we never stop to notice that no king of old ever enjoyed quarters so comfortable as those found in a Holiday Inn Express, that Andrew Carnegie never had a car as good as a Honda Civic, that Akhenaten never enjoyed such wealth as is found in a Walmart Supercenter. The irony is that capitalism has achieved through choice and cooperation what the old reds thought they were going to do with bayonets and gulags: It has recruited the most powerful and significant parts of the world’s capital structure into the service of ordinary people. And it would do so to an even greater degree if self-interested politicians in places such as India and China (and New York and California and D.C.) would get out of the way.
The difference between market and state — between the world of choice and the world of command — is that whether you’re an In-N-Out aficionado or a Shake Shack man, nobody is going to put a gun to your head and tell you that you can’t have it your way. To paraphrase that great national embarrassment: If you like your burger, you can keep your burger.
HT: Warren Smith
For home appliances, the ‘good old days’ are now: They’re cheaper, better and more energy efficient than ever before
View related content: Carpe Diem
Thanks to ongoing advances in energy-saving technologies, the chart above shows the significant increases in the energy efficiency of five common home appliances based on historical data from the Association of Home Appliance Manufacturers (AHAM) for the years 1981 to 2013. The dramatic improvements in energy efficiency that have taken place over the last three decades translate into significant energy cost savings for American households.
For example, the average refrigerator manufactured in 1981 consumed 1,278 kilowatt hours (kWh) of energy per year and those manufactured in 2013 consumed only 444 kWh of energy per year – a decrease in energy consumption of 65.3%! Similarly, the average annual energy consumption for clothes washers has declined by 74.2% since 1981, for dishwashers by 52.3%, for freezers by 23.1%, and for room air conditioners by 30.1%.
The efficiency of appliances can also be measured by their “energy factors,” which are standard industry and government metrics that measure an appliance’s overall energy efficiency. In 1981, the energy factor (EF) of a typical home refrigerator was 5.59, and by 2012 the EF increased more than three-fold to 17.25, for a 217.5% improvement in energy efficiency over the last 33 years (see chart above). The other four home appliances tracked by the AHAM also had significant improvements in energy efficiency since 1981 based on the increases in their EF ratings. Compared to 1981, the energy efficiency of the average room air-conditioner has increased by 46.4%, today’s freezers are 63% more efficient, and modern washing machines and dishwashers are more than twice as energy-efficient (see chart above). As one example of how technology has improved the energy efficiency of home appliances, today’s dishwashers consume less than half the energy of a 1981 model because of advances in soil sensors that minimize water usage, and the increased use of stainless interiors that accelerate drying time.
If the energy efficiency of the average dishwasher more than doubled since 1981, what has happened to its price, measured in “time-cost” — the number of hours a typical American would have to work at the average hourly wage to earn enough pre-tax income to purchase a standard model? The time-cost of a modern dishwasher today is remarkably only one-third the time-cost 30 years ago, as the comparison and analysis below will show.
In 1981, the 24-inch built-in dishwasher pictured above from a 1981 Wards Christmas catalog sold for $359.88. The average hourly wage then was $7.42, meaning that it would have taken 48.5 hours of work at the average hourly wage for a typical American to earn enough income 34 years ago to purchase the Wards dishwasher above.
The new Sears Kenmore 24-inch built-in dishwasher pictured above is currently listed on the Sears website at a price of $349.99. At the current average hourly wage of $20.74, the typical American today would only have to work slightly less than 17 hours to earn enough pre-tax income to buy today’s energy-efficient dishwasher, which is 65% lower than the 48.5 hour time-cost for the 1981 model. Here’s another way to compare the difference in time-cost: a typical American in 1981 would have had to work more than a week — six 8-hour days — to earn enough income to buy the Wards dishwasher displayed above, whereas an American today would only have to work for slightly less than two days to earn the income required to buy a modern Sears Kenmore dishwasher.
Bottom Line: Today’s modern household appliances are not only cheaper than ever before, they are the most energy-efficient appliances in history, resulting in additional savings for consumers through lower operating costs. The average dishwasher today is not only more than twice as energy-efficient as a comparable 1981 model, but the time cost of a 1981 dishwasher (48.5 hours) was about three times more expensive than today’s model (17 hours), measured in hours worked at the average hourly wage. Put those two factors together, and the average American’s dishwasher today is about six times superior to the dishwashers of the early 1980s.
Stated differently, if the time-cost of dishwashers hadn’t fallen by 65% since 1981, and if dishwashers hadn’t improved in energy efficiency by a factor of more than two times, Americans today would be paying about $1,000 for a basic dishwasher (48.5 hours of work at $20.74 per hour) instead of only $350, and it would take more than twice as much energy to operate. Likewise, we would expect comparable large decreases in the time-cost of the other four appliances, along with significant reductions in their operating costs due to the dramatic increases in energy efficiency since the early 1980s.
Put it all together and American consumers have never been better off when it comes to the standard home appliances that we all own and take for granted. Modern home appliances are cheaper, better, and more energy-efficient than ever before. Today’s affordable and energy-efficient household appliances are part of the ongoing, but under-appreciated “miracle of manufacturing.” Thanks to advances in technology and worker productivity, American consumers get cheaper and better manufactured goods (appliances, cars, clothing, food, and household furnishings) year after year, which translates into a higher standard of living for all Americans, especially for lower and middle-income households. If we wanted to identify a “golden era” of prosperity for middle-class America based on the affordability of owning and operating common household appliances, today’s consumers are many times better off than the consumers of any past decade, including the 1950s that Paul Krugman and others wax so nostalgic about. The “good old days” for most American consumers are happening right now.