Wednesday, April 25, 2018

QUORA: How do investment bankers justify earning 7 figures?



The sub-text to the question included the following:
I guess my point would be, is there any sense of guilt from receiving a disproportionately large monetary compensation from society or do investment bankers truly believe that market forces determine fair compensation. Or do investment bankers not think about why they should get compensated and it is just a money grab. I'm trying to wrap my head around why we reward financial engineers more than actual engineers and if this is a good thing or not.

I left this answer, edited for clarity:


The answer is in the question: They earned it.


To earn money is to net a gain through one’s own productive efforts and in voluntary trade with others. “Society” doesn’t compensate. “Society” is not an entity that thinks and analyzes and then “decides.” Society is an abstraction. Only the individuals that make up society decide, each through his own choices on his trading decisions. How much one earns is a reflection of the cumulative value his work creates for others, as determined by the individual[s] who voluntarily trade with him. This principle applies equally to all productive individuals at all economic levels, from landscapers to investment bankers.


Who “decides” how much to compensate investment bankers? Anyone who trades with them. How should investment bankers justify their compensations? By saying simply, “I earned it.” No one should ever feel guilty for what they earn, in any field, no matter how much that is—so long as he actually earned it, rather than merely appropriated it by fraud or deception or force.


Why do financial engineers make so much more than so-called “actual” engineers? Perhaps it’s because the job of investment bankers—the raising and successful allocation of capital—is so much more valuable, or perhaps because good investment bankers are much rarer than engineers. Whatever the reason, the only way that fair compensation can be arrived at longer term is through the cumulative choices of individual traders operating within a free market (which is why we should strive for a fully free market rather than the mixed economy—part free market and part unfree (government controlled) market—that we have now).


Related Reading:


In Pursuit of Wealth: The Moral Case for Finance—Yaron Brook and Don Watkins


Atlas Shrugged—Ayn Rand



Monday, April 23, 2018

Education Apples and Tax Oranges

Teacher strikes was the subject of a 4/14/18 New Jersey Star-Ledger editorial. Education funding and trickle-down economics: a cautionary tale writes:

Among the six states that made the largest cuts in per-student funding between 2008 and 2018 are the four states where teachers have walked out this year.


Oklahoma's obscene 28-percent cut topped that list. Kentucky was third (15.8), Arizona was fifth (13.6), and West Virginia was sixth (11.4). Every state in the top 10 has a GOP-dominated government. Oklahoma and Arizona cut income and corporate taxes during that period.

The Star-Ledger continues, “Others will follow - experts predict the wildfire [the strikes] will soon spread to Mississippi, Idaho, and Georgia.”

So the fuse has been lit. The remaining question is whether some governments will concede how their tax cuts and trickle-down fallacy caused a brain drain that could doom their states for decades.

I left these comments:

Oranges and apples.

The “trickle-down fallacy” is a fallacy. There is actually no such economic theory as “trickle-down economics.” The premise makes no economic sense. “Trickle-down” is a political smear used to disparage tax cuts and to distract from the real issue; the protection of politically powerful factions dependent on government’s taxing powers, including the monopolistic government education establishment, from private individual choice and accountability. Tax cuts are about people keeping more of what they earn, and spending it as they, rather than government officials, see fit.

The schools should be private. Then the market--the cumulative voluntary choices of millions of individual consumers, competition among educators, and the laws of supply and demand--will determine the appropriate pay levels of teachers based on qualifications according to the school’s standards and/or the students’ needs and parents’ judgements. Then we wouldn’t have this conflict between taxes, much of which is unjustly levied against people with no children in the government schools, and the teachers’ paychecks and other school needs. Then education funding wouldn’t be dependent on politics. Then educators will be accountable in a real way--to their customers, just like any private enterprise, rather than government bureaucrats. Now, that would be a much “keener” way for “society” to treat “its children.”

If teachers’ pay is a political football, don’t blame tax cuts. It’s only because schools are coercively tax funded to begin with.


Related Reading:

"Trickle-Down Economics": Anti-Capitalists' Insulting Portrayal of the "Common Man"

An Open Letter to Katie B. On Education Funding

Toward a Free Market in Education: School Vouchers or Tax Credits

Saturday, April 21, 2018

Letter: ‘Vouchers Will Hurt Public Schools.’ So?

Here is an excerpt from a letter that appeared in the New Jersey Star-Ledger on 3/17/17 opposing a federal school voucher bill:

Vouchers will hurt public schools

The proposed federal school voucher bill (HR610) in Congress will divert funds away from public education and will ultimately have a catastrophic effect on public schools.

A true democracy requires an educated public and the public school system is the most effective way to achieve that goal.

Jeanne Perry Califon
A typical argument advanced by defenders of the government (public) school establishment against school choice is that it will “divert funds away from public education and will ultimately have a catastrophic effect on public schools,” as this recent letter put it.

To which my answer is—So?

The entrenched public school establishment—the teachers unions, public school administrators, school boards—do not own the public purse. Those dollars belong first to the taxpayers, each as individuals. To take by force a taxpayer’s money, allegedly for education, and then deny that person the right to direct it as she chooses is a cruel fraud.

The dictatorial monopoly we call the “public schools” exists as it is only by force of taxation and compulsory school attendance laws. Why should that be? Why should an entrenched and powerful political faction have sole power to impose their educational philosophy, teacher training, and school administration methods on the rest of us? The question every public school apologist should be asked is; Don’t you believe that, given the choice, taxpayers and parents would voluntarily send their children to your schools, and voluntarily pay for them? The answer is obvious.

The public school establishment does not and should not have first claim on Americans’ education tax dollars or their children. If we must have tax-supported education—and at this point Americans overwhelmingly believe that every child should be guaranteed the financial means to a K-12 education—it does not automatically follow that tax-funded education must be provided by a government-backed coercive monopoly free from parental choice, taxpayer oversight, and entrepreneurial innovation and competition. The taxpayer and the parent should have first claim on how her education tax dollars are spent and on the course of her own child’s education, respectively. It is incredibly arrogant and laughingly absurd to claim that “the public school system is the most effective way to achieve . . . an educated public.” A public school that parents willingly choose not to send their child to should lose its public funds, and if that school must close or merge with another public school to survive, so be it. No public school has an inherent right to exist if liberated parents “vote with their feet”—their tax dollars.

More tellingly, the reference to “a true democracy” as the fundamental reason for government schools spills the beans as to the true purpose of the government schools—political indoctrination. But the schools should not be about directing the future voting choices of its students. The basic purpose of education is to prepare the child to be an independent, thinking, rationally critical adult capable of understanding and dealing with reality so as to give him the intellectual power and self-esteem to make his own life the best it could be. The capacity for properly analyzing political issues is of course a derivative of being an independent thinking adult. But Ms. Perry’s focus on “true democracy”—what I call Democracy Fundamentalism, the opposite of constitutional republican democracy—all but acknowledges that political indoctrination, not education, is what largely motivates the public school monopoly defenders and lies behind the opposition to school choice. How else to explain why the young come out of America's schools with a bias toward collectivism/authoritarianism/socialism? A properly educated young adult—the independent thinker—will implicitly gravitate toward the politics of individualism, liberty, and capitalism. The statists will not have that. They recognize that the independent, self-responsible adult will demand that his freedom to direct the course of his own life is the enemy of statist power of the individual. Thus, the virulent, fanatical opposition to school choice.

Greed also is a significant motivator of the anti-choice reactionaries, as it does for defenders of any coercive monopoly. The reactionary defenders of the public schools want to maintain the dictatorial monopoly not just for financial reasons but also in order to protect their lock on Leftist political indoctrination, and thus the statists’ political power. This makes it all the more urgent to break the public school monopoly through school choice. A free market is the only genuine mechanism for holding educators accountable, by virtue of the ability of parents to leave one school for another and the freedom of education entrepreneurs to offer a diverse array of competing alternatives. A broad and robust school choice option is a major step toward a genuine free market. Universal school choice through tax credits and/or education savings accounts* would legally recognize the moral right of every taxpayer to sponsor the education of any child—be it her own, a grandchild, a child of a low income household, a special needs child, gifted child, etc.—based on the voluntary choice of the recipient child’s parent or guardian. The choice could be a charter school, a private school (for-profit or non-profit), the homeschool option, or even another public school.

The ability to provide a better education alternative to their local public school should not be exclusive for wealthy parents. Nor should middle or lower income parents who do try an alternative have to endure the crushing hardship of having to pay double—once for the public schools they do not use, and again for the educational alternative they try to give their children. The universal school choice movement is the answer.

-------------------------------------------------

[* NOTE: I personally do not approve of vouchers because of the potentially deleterious effect they would have on private schools accepting the vouchers. See my article Toward a Free Market in Education: School Vouchers or Tax Credits?]

Related Reading:

Real School Choice Depends on Free Exercise of Individual Rights

Modern-Day George Wallaces in Reverse

School Choice Doesn’t ‘Discriminate’; It Expands Opportunity Through Liberation

Contra Congressman Donald M. Payne, a ‘For-Profit Model’ is Just What Education Needs

The Educational Bonanza in Privatizing Government SchoolsAndrew Bernstein for The Objective Standard

Thursday, April 19, 2018

Producers and Morality: Fake News About ‘Ayn Randism’ from The Weekly Standard

Via Anoop Verma’s For the New Intellectuals Facebook site I found this article from The Weekly Standard, How Hillary Clinton Is Like Ayn Rand. Ethan Epstein notes remarks made by Hillary Clinton in India, in which she claimed “that the areas she won represent ‘two thirds of America’s gross domestic product’,” inferring that people outside those areas are morally inferior. He then jumps too “What I find particularly interesting is the bizarre strand of Ayn Rand-ism in Clinton’s sentiments.” This paragraph sums up the article:

In other words, Clinton’s remarks represent nothing so much as a bizarre strand of Ayn Randism. Clinton, like Rand, seems to be suggesting that “high GDP” people—a.k.a. America’s “producers”—people don’t just have more money than the rest of us. She’s saying they’re better people, too. And as for the Trumpian masses out in low GDP America? What a bunch of “takers!”

I left this comment @ For the New Intellectuals:

Where are the fact checkers at The Weekly Standard? Rand’s view on moral virtue as it relates to economics is that productiveness relies on moral virtue, but that the absolute quantity of any individual’s wealth or level of economic achievement is not the measure of that person’s moral virtue. This view permeates her writing, both fiction and nonfiction. Clinton’s inference is idiotic. But it is not Rand’s view.

-----------------------------------

When Rand spoke of “producers,” she spoke of people who “go as far on the road of achievement as his ability and ambition will carry him” (P. 25). In any of Rand’s writings, I know of no instance that says or implies that the extent of a person’s achievement is the measure of his morality. Certainly, there is nothing about Objectivism that’s measures morality in terms of dollars. Dollars earned are a measure of value created, for sure. But not morality. Moral virtue as it relates to economics consists of doing the best one can, honorably, in the productive field of one’s choice, within the context of all of one’s life goals and values. Rand understood “productive work” to mean

the consciously chosen pursuit of a productive career, in any line of rational endeavor, great or modest, on any level of ability. It is not the degree of a man’s ability nor the scale of his work that is ethically relevant here, but the fullest and most purposeful use of his mind.
Emphasis added. This comes from Rand’s definitive statement on morality, The Objectivist Ethics. Her novel Atlas Shrugged is full of wealthy villains (Orren Boyle, James Taggart) and virtuous producers of modest means and ability (Eddie Willers, Jeff Allen). At best, Ethan Epstein doesn’t know what he’s talking about. At worst, he’s deliberately misrepresenting Rand’s moral philosophy—or, in today’s lingo, peddling “fake news” about Rand and her moral philosophy.

Related Reading:

Eugene Robinson’s Disdain for the Working Class, and Distortion of Ayn Rand

"Money-Makers" vs. "Money-Appropriators"

On Ayn Rand's Dishonest Critics

Tuesday, April 17, 2018

Pruitt’s Real Value

The New Jersey Star-Ledger devoted an entire editorial to blasting Environmental Protection Agency head Scott Pruitt. After tarring Pruitt with corruption charges the Star-Ledger turns to Pruitt’s “real damage”--a list of regulation rollbacks starting with withdrawal from the Paris Accord and scuttling of Obama’s Clean Power Plan. “Pruitt's greatest sins of all: his sadistic treatment of the planet and contravention of the EPA's core mission.”

I left the following comments to Don't overlook Scott Pruitt's real damage, slightly edited:

Pulling America out of the Paris Climate Accord and phasing out the Clean Power Plan makes Pruitt a great EPA administrator. Both are aimed at strangling productive Americans’ economic well-being. The Paris Accord forcibly redistributes Americans’ wealth to the rest of the world to “atone” for Americans’ great economic success, while simultaneously strangling the driver of that success, America’s fossil fuel industry. The Power Plan forces Americans away from reliable energy, mainly fossil fuels, in favor of unreliable “clean” energy. Since energy is the industry that drives every other industry as well as our lives, it is really an economic poverty plan.

As to the rest of that list, I don’t know enough about the technical/scientific issues to make a judgement (“scientists say” appeals to authority don’t work with me).

The real problem is “the EPA's core mission” as conceived by Environmentalism--to “save the planet” from human living. Humans survive by reshaping the planet to human benefit through industrial/technological development. Pruitt brings a balanced perspective that values human life over unaltered nature. I trust his humanist perspective over Environmentalism’s naturalist concept of the EPA’s “core mission”. Pruitt is not pro pollution. He is pro-human life, crafting policies that balance the economic harm from pollution controls and the negatives of fossil fuels against the benefits of industrial progress and the reliable energy so vital to it.

You can have economic progress while reducing pollution and focussing on true threats to human health. Pruitt has reigned in the EPA’s dictatorial, life-hating, constitution-shirking, rights-violating “green” activists within the EPA. Pruitt is great for human health, flourishing, and freedom.

------------------------------------
The Environmental Protection Agency should be concerned with preserving and improving the human environment, not “saving the planet.” Scott Pruitt's real value is that he understands this. As
Mollie Hemingway reports for The Federalist:

[Pruitt] is demanding scientific rigor for agency work.

Pruitt is not some anti-environmentalist * but someone who wants the EPA to do what Congress charges it with doing to improve the nation’s environment. So he awarded $100 million to upgrade drinking water in Flint, Michigan, and began an effort to eradicate lead poisoning from drinking water. He committed additional funds to deal with the EPA’s botching of the Gold King Mine release that polluted Colorado and Utah. 
There are poor ways, average ways, and shrewd ways to tackle the constitutional problems that arise from the administrative state. Many Republicans either don’t realize the problems of an unelected bureaucracy’s power, or fail to combat those problems effectively. Pruitt is in the final category, demonstrating competency and a devotion to rule of law. And he has the courage that so many of his GOP peers lack, not being intimidated by the normal media frenzy that intimidates other Republican appointees.
--------------------------

* [I distinguish between ideological Environmentalism (upper-case "E") from casual environmentalism, which people may conceptualize as simply recycling or planting a tree, not anti-humanism.]


Related Reading:

Sunday, April 15, 2018

Time to End All Government-Funded Climate Change Research

When President Trump cut funding for the federal Environmental Protection Agency, the climate catastrophists went nuts—literally. The New Jersey Star-Ledger editorialized, Deranged man attacks climate change funding with budget ax. The editors profess concern for controlling pollution. But its main concern revolves around climate change.
Donald Trump's effort to kill nearly one-third of the federal Environmental Protection Agency's budget, including climate research, and all climate funds to the United Nations leaves no doubt about where we, as a nation, stand.
My emphasis.

It’s becoming easier and easier for anyone who values facts over public opinion to discover how mild and manageable global warming/climate change actually is. Much if not most of climate change—the jury is still “out” on this—is not related to human activity Decades of failed predictions of increasing weather extremes is based on pure speculation, not demonstrated science. We humans are much safer from climate dangers than ever before. Living on Earth has dramatically improved during the very time when catastrophe was supposed to strike, thanks to the reliable, economical, increasingly clean “frenetic pace” of burning of fossil fuels. Increasing CO2 levels have many benefits. Despite hundreds of billions of dollars spent on “alternative energy” subsidies, fossil fuels are still the most vital to human flourishing.

Yet, as more and more people come to understand the truth that the climate change catastrophist scenario is hogwash, the climate fanatics get more hysterical. Now, dissenters are not merely “climate deniers.” Now we can add a new pejorative, “deranged.” As the climate catastrophists’ case thins out, their insults get heavier.

The Star-Ledger seems most concerned with Trump’s cuts in climate change research funding. It worries that “This is a White House that lifts its talking points straight from ExxonMobil.” But this begs the question, why should we trust research generated by government?

Government funding of science is by definition politicized—the funding must come through politicians, after all—and EPA climate science research is probably the most politicized of all, thanks to the Left statists. The cabal of government funded scientists becomes “The Establishment,” which is then self-servingly peddled as the “The Final Authority.” Climate catastrophists question the work of dissenters if even one dollar of their funding comes from the fossil fuel industry. Fair enough. But if fossil fuel industry funded research is questionable, shouldn't research funded by politicians be even more vigorously questioned? At least the industry funding is voluntary, not taken by force from taxpayers.

It’s about time the Climate Establishment got completely cut off from taxpayer funding. The Star-Ledger claims that “A solid majority of Americans believe the effects of climate change are already occurring, and are driven by human activities,” implying that climate change is a major concern for these Americans. Let the Star-Ledger and its ilk set up a GoFundMe page and make up the EPA cuts with voluntary contributions. That will be a much better measure of the American public’s concern about climate change than any vaguely worded public opinion poll. It would be much more objective if the EPA relied strictly on privately funded research in the same manner as climate catastrophe dissenters do, giving equal consideration to all research. Then it could get a better cross section of informed opinions than it can by continuing to pit its EPA established “Establishment” against dissenters it brushes aside as “deniers” and “deranged.”

As MIT Professor Emeritus of Atmospheric Sciences Richard Lindzen observes in a letter to President Trump, “Calls to limit carbon dioxide emissions are even less persuasive today than 25 years ago. Future research should focus on dispassionate, high-quality climate science, not on efforts to prop up an increasingly frayed narrative of ‘carbon pollution.’ Until scientific research is unfettered from the constraints of the policy-driven UNFCCC, the research community will fail in its obligation to the public that pays the bills.” I submit that this will not happen until the public stops being forced, through taxes, to pay the bills. It’s time all climate research is evaluated on a level, unbiased, un-politicized playing field.

Related Reading:

Bill Gates, Capitalism, Socialism, and Climate Change

Full MIT Professor Emeritus of Atmospheric Sciences Richard Lindzen’s Letter to Trump Urging Withdrawal from the IPCC

Powerline Blog on Lindzen’s Credentials

Friday, April 13, 2018

The Insidious ‘Left Behind’ Argument Against Charters

Regarding Charter schools are expanding to new turf in N.J. and bringing the same bitter debate by NJ.com’s Adam Clark (See my post of 4/11/18;‘Investing’ of ‘Resources’ In Education Is Up to the Taxpayer), there is one argument against charter schools and school choice that I find particularly pernicious. The argument was repeated here;

"No matter whether you are talking suburban, rural or even urban, sometimes the issues are the same," [Garden State Coalition of Schools executive director Betsy] Ginsburg said. "What is the impact on the students who are left behind in the traditional public schools?"

Just on its face, this is surely an indictment of the government’s monopolistic education establishment, a.k.a. “traditional public schools”; a blatant admission of their inferiority and failure. Why else would students who remain in the traditionals be considered “left behind?”

But that’s not the worst of it. There is something more sinister lurking in that rationalization against charters--an educational egalitarianism. The “left behind” argument basically implies that achievement is a zero-sum game; that the success of one student comes at the expense of the failure of another. This leads to the mindset in “the students who are left behind” that their own educational success is not tied to their own efforts but is instead dependent on bringing down the higher achievers; that opportunities for others for a better education must be crushed in order for “the students who are left behind” to have a chance; that all students must be mashed together so all can move along at the same pace regardless of individuality, with no one being allowed to excel much beyond the average.

This is a psychological war on self-esteem, the fuel that drives motivation to go after a successful and fulfilling life. This “left behind” argument orients the child toward others and away from himself, instilling in him a vested interest in the failure of others. What other result can one expect, when you’re essentially telling “the students who are left behind in the traditional public schools?” that his failure is all the fault of charter school students’ success? This is a prescription for envy and resentment, rather than admiration for and motivation to emulate, the higher achieving students. It’s a self-esteem killer, and thus a motivation-killer, that has to at some point result in hatred of achievement and achievers (the same envious mindset that underpins the “war on income inequality”).

This “left behind” argument against charters specifically and school choice more broadly is not about education or educational opportunity. It is not about lifting students. It is an undisguised attack on educational improvement and excellence. To what end? To preserve the monopolistic education status quo. It is devious and greedy.

All children have the capacity to excel educationally—that is, to become independent thinking lovers of learning, each to the extent of her abilities. To “excel” does not mean in relation to others, but in relation to the individual child’s unique potentialities. Not all students will reach their potential, whether because of the failing of the kid or the teacher or the curriculum or the educational philosophy or parental neglect. But that is not a problem that can be resolved by denying other children their opportunities; i.e., by educational egalitarianism. Success is not a zero sum game, and no child should ever be held back for the sake of others not being “left behind.” To suggest that any child should is a hateful moral abomination.

The war on charters and school choice is a war on educational excellence. Rather than pit child against child in a war on self-esteem, expand school choice to all children and all parents. There is nothing sacred about traditional public schools. Whether through tax credits or full, unrestricted Education Savings Accounts,* education tax dollars should follow the student, whose course is directed by the parent/guardian. If the traditional public schools can’t compete in the entrepreneurial environment, let them fold like any private enterprise that can’t draw customers voluntarily.

* [I support the complete separation of education and state, a free market. But as an interim solution, universal school choice within the context of the current education tax regime would be a huge improvement.]

Related Reading:

Are Parents Capable of Properly Educating Their Children in a Free Market? (See also comments below.)

Toward a Free Market in Education: School Vouchers or Tax Credits?

Newark's Successful Charter Schools Under Attack—for Being Successful

Education in a Free Society—C. Bradley Thompson for The Objective Standard