Steve Sailer's iSteve Blog

My new Taki article

2009-07-15T08:45:00.004-07:00

Every so often, an action hit comes out of nowhere—Mad Max, Terminator, Ricci v. DeStefano. Inevitably, we start hoping that the big budget follow-up can keep the same excitement going, just with huger explosions. A few times—Road Warrior, Terminator II—our dreams come true.

I’ve got to say, though, that this Ricci sequel, The Senate Sotomayor Hearing, has so far been the dullest successor since Matrix Reloaded.

Can’t anybody afford a decent script doctor?
You might almost imagine that Sotomayor was crafted to drive away its audience. It’s as if the people in Washington don’t really want American citizens paying attention.

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

Anti-Awareness Campaigns

2009-07-14T23:05:00.002-07:00

Stuff White People Like picked "Awareness" as #18 on the list:

An interesting fact about white people is that they firmly believe that all of the world’s problems can be solved through “awareness.” ... What makes this even more appealing for white people is that you can raise “awareness” through expensive dinners, parties, marathons, selling t-shirts, fashion shows, concerts, eating at restaurants and bracelets. In other words, white people just have to keep doing stuff they like, EXCEPT now they can feel better about making a difference.

Yet, even more than the "Awareness Campaign," it strikes me that the pervasive leitmotif of our age is the "Anti-Awareness Campaign," the semi-organized efforts to keep people from connecting the dots.

Consider how the facts in the Ricci case are repeatedly described as some weird anomaly, when they are simply business as usual in most big cities, barely distinguishable from, say, the Biondo case that dragged on for years in Chicago. But pattern recognition is despised.

The goal is not to impose hypocrisy, but stupidity.

If you want a picture of the future, imagine a boot stamping on a human mind -- forever.

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

Postjudice

2009-07-14T19:58:00.006-07:00

Last week, there was one of those now-traditional Two Minute Hates in the national media, familiar to people as diverse as James Watson, Don Imus, and Michael Richard. This one was directed at a swim club in suburban Philadelphia, which had agreed to allow an inner city daycare center to use its swimming pool each Monday all summer. But after the first visit by 65 black and Hispanic children, the club hastily changed its mind.

Of course, the swim club was denounced universally for "prejudice," but wouldn't the word "postjudice" be more appropriate? After all, before hand, the swim club had presumed that hosting 65 inner city children in its pool (two-thirds of which is deep enough to drown in) would be a swell idea, and only then developed an aversion after they had experience with them.

I look forward to a future in which we will all engage in Obamaoist self-criticism sessions beginning, "I hadn't realized I was postjudiced until ...

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

The Welsh Genghis Khan

2009-07-14T16:42:00.001-07:00

7 Million People Direct Descendants Of Single Smooth-Talking Ancestor

BALTIMORE—Geneticists at the Johns Hopkins University announced Monday that an estimated seven million people worldwide carry a distinctive genetic marker linking them to a single smooth-talking common ancestor.

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

How Sotomayor and Co. tried to bury the Ricci case

2009-07-14T00:25:00.006-07:00

Here's a National Journal article by Stuart Taylor on how Sotomayor and two other judges almost got away with making the Ricci case disappear without their ten fellow judges on the Second Circuit hearing about it. Sotomayor's old mentor, Jose Cabranes, read about it in his local New Haven newspaper and blew his stack at their tactic, which is the only reason it didn't disappear down the Memory Hole.

Presumably, Cabranes, a New Havenite, didn't feel like taking a chance on burning to death due to incompetent New Haven firemen.

Tuesday live update: Orrin Hatch is asking some tough questions about the Cabranes scandal, to which Sotomayor is not replying well, but now Sen. Hatch is rambling off into a speech instead of following up with tougher questions, and now has given up. And now it's time for lunch. Man, the action is just non-stop!
---
Anyway, I then had to go out and couldn't catch the thrill-packed conclusion of Tuesday hearings, so did anything interesting happen?

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

Every single AP Test fails EEOC's Four-Fifths Regulation

2009-07-13T19:22:00.003-07:00

At the heart of the Ricci case, which Judge Sonia Sotomayor attempted to bury so that it couldn't be appealed when she heard it by upholding the lower court's anti-Ricci decision without an opinion (outraging her mentor Judge Jose Cabranes), is the Equal Employment Opportunity Commission's Four-Fifths Rule.

This regulation says that on any employment test, the lowest scoring ethnic group better pass at a rate at least 80% as high as the highest scoring ethnic group.

The fashionable Advanced Placement tests provide us with a database to test the reasonableness of the rule that gives the Disparate Impact theory its teeth. As I mention in post below, blacks only pass AP tests at a per capita rate not Four-Fifths but One-Twentieth of the Asian rate.

But what about just those more elite students who bother to take AP tests? How reasonable is the Four-Fifths rule for them?

The gaps are smaller, but not a single AP exam would pass the EEOC's Four-Fifth's Rule, as the table below shows. (And many colleges require not just scores of 3, but 4s or 5s, which make the racial gaps substantially larger.)

Passing Rates	White	Asian	Black	Hispanic	Min / Max
Total Exams	62%	64%	26%	42%	40%
Italian	47%	28%	19%	66%	29%
Econ: Macro	56%	62%	21%	27%	34%
Hum Geography	59%	61%	21%	34%	34%
Enviro Sci	60%	58%	20%	31%	34%
World History	55%	59%	20%	27%	34%
Chemistry	57%	65%	23%	30%	35%
Econ: Micro	66%	70%	25%	36%	35%
Statistics	63%	68%	24%	34%	35%
English Lit	69%	63%	24%	36%	35%
Spanish	53%	55%	28%	80%	35%
Biology	54%	59%	21%	26%	36%
US History	53%	56%	21%	27%	38%
English Compos.	67%	64%	27%	33%	40%
Gov: US	57%	54%	23%	28%	40%
Comp Sci A	61%	61%	25%	35%	41%
Comp Sci AB	73%	78%	32%	61%	42%
Physics B	64%	64%	27%	31%	42%
Gov: Compar.	64%	67%	30%	42%	44%
Chinese	77%	99%	75%	44%	45%
Music Theory	71%	78%	36%	46%	46%
Calculus AB	65%	66%	30%	39%	46%
Japanese	57%	84%	44%	40%	48%
Art: History	62%	57%	31%	43%	51%
Euro History	65%	65%	33%	40%	51%
Psychology	72%	71%	38%	48%	53%
French Lit	70%	71%	38%	48%	53%
Physics C: Mech	75%	76%	44%	50%	58%
Latin Lit	67%	69%	42%	52%	60%
Studio Art: Drawing	70%	77%	48%	56%	61%
Latin: Vergil	62%	69%	47%	44%	63%
German	66%	73%	46%	60%	64%
Physics C: E&M	70%	73%	47%	55%	64%
Calculus BC	82%	82%	55%	63%	67%
Studio Art: 2-D	70%	72%	52%	59%	72%
Spanish Lit	70%	77%	56%	60%	73%
Studio Art: 3-D	64%	67%	50%	49%	73%
French	57%	57%	49%	42%	74%

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

Whatever happened to Barry Ritholtz, anyway?

2009-07-13T17:31:00.006-07:00

Barry Ritholtz used to come around here a lot talking smack about how he had so much data proving I was wrong about diversity being a major factor in the mortgage meltdown. So, we laid our cards on the table ... and now he doesn't seem to want to talk about it anymore.

How come?

UPDATED: In the comments, Barry writes:

Ritholtz said...
Im busy with real stuff . . .

Hmmmhmmmh ... He seemed to have plenty of time before we had our little showdown.

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

Evil Steve's How-To Guide to the Softest AP Tests

2009-07-13T14:07:00.019-07:00

Following up last night's VDARE.com article on Advanced Placement testing, I've been mulling some more over the problem off how to find the easiest Advanced Placement tests for high school students to pass in order to get free college credit. All AP Tests are fairly hard, but which ones take the minimum combination of IQ, math skills, and midnight oil to squeeze by with a passing score of at least 3 out of 5?

So, I've come up with a methodology that I suspect you wouldn't find anywhere else: Relative to Asians, which AP tests do blacks do best on in terms of passed tests per capita? In other words, if all you want to do is to find some AP Test where you can skate through with a passing score like a cool black kid rather than grind it out like an Asian nerd, then you want to look at tests where blacks do best relative to Asians.

(Obviously, this is a relativistic comparison, not an absolute one. Overall, in absolute per capita terms, Asians pass 20 times as many AP tests as blacks do, so Asians do much better on each of the three dozen AP tests than blacks do. I won't bore you with a detailed explanation of my relativism-squared methodology: in brief, I'm comparing black passing rates per test relative to the overall black passing rate relative to the same comparison for Asians.)

The rank order turned out to fit my a priori stereotypes to a T. Relative to Asians, blacks did worst on the monster science and math tests like the upper level Computer Science AB test, Physics C: Electricity & Magnetism, and upper level Calculus BC. Blacks did best on the softer-sounding social science, humanities, hands-on art, and language tests.

	Black	Asian	Black/Asian
Total Exams Passed Per 1,000 Youths	57.9	1,148.1	100
Computer Science AB	0.0	5.5	18
Physics C: Elec. & Magnet.	0.1	11.3	22
Calculus BC	1.2	73.1	32
Physics C: Mechanics	0.4	23.3	32
Chemistry	1.4	66.7	41
Computer Science A	0.2	10.7	42
Physics B	0.8	34.2	45
Economics: Micro	0.7	24.0	56
Statistics	1.8	58.1	62
Economics: Macro	1.0	33.0	63
Biology	2.6	78.8	65
Calculus AB	4.3	107.8	79
European History	1.7	40.5	85
Latin: Vergil	0.1	2.1	86
Art: History	0.4	7.9	94
German: Language	0.0	1.0	96
Latin: Literature	0.1	1.4	100
Government & Politics Comp.	0.3	5.2	103
Environmental Science	1.1	20.2	104
Spanish Language	0.9	16.7	105
Spanish Literature	0.1	1.7	115
Music Theory	0.4	6.1	118
Government & Politics U.S.	3.6	57.6	124
US History	6.7	107.8	124
World History	3.1	49.1	124
Studio Art: Drawing	0.5	6.5	150
English Lang. & Composition	8.6	102.9	166
English Lit & Composition	8.3	97.4	168
French: Literature	0.1	0.6	170
Psychology	4.9	55.2	175
Human Geography	1.2	12.1	205
Italian Lang. & Culture	0.0	0.1	214
Studio Art: 2-D Design	0.5	4.7	217
Studio Art: 3-D Design	0.1	0.6	224
French: Language	0.8	6.3	251

In this table, the first row is the aggregate across all AP tests per 1,000 students. In 2008, blacks passed a little under 0.06 AP tests per kid, while Asians pass about 1.15 tests each. In other words, on average, blacks pass about 1/20th as many AP tests per capita as Asians, so we'll set that level of relative performance to 100. For, say, Calculus BC, 1.2 out of every 1,000 blacks of the relevant age passed versus 73.1 out of every 1000 Asians, or 1/62nd as many, which is only 32% as good as the overall 1/20th rate. In contrast, at the bottom of the list on French Language, blacks did 1/8th as well per capita as Asians did, which is 251% of their typical performance relative to Asians.

So, Psychology, Human Geography, the two Englishes, and World History look pretty doable, with Environmental Science the easiest of the science tests. In contrast, on this scale, European History is the hardest of the purely verbal tests.

One bias to keep in mind in this scale is that I would bet that females take a large majority of the AP tests among blacks, but not among Asians. This might partially account for the relatively strong black performance in French. (Also, there may a certain number of black immigrant families that speak French at home, from Haiti and West Africa.)

Also, remember the distinction between one year and multi-year subjects. The French Literature AP Exam is, apparently, a piece of cake ... assuming you've already spent years learning French and reading the classics of French Literature. On the other hand, the Psychology exam is intended to cover what you'd learn from scratch in a one-semester college Psychology 101 course.

In the comments, Lucius Vorenus points out that this table doesn't constitute hatefacts or hatestats, but an until-now never before defined category of knowledge: hatecalcs.

Also, the term "Stevil" could be useful for the act of looking up diversity data for objective, non-Who? Whom? purposes.

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

My useful new VDARE.com column on Advanced Placement testing

2009-07-12T20:39:00.013-07:00

Here's an excerpt from my new VDARE.com column, which is based on a big spreadsheet I built of 2008 Advanced Placement Test results, and has lots of graphs (click on this one to make it readable -- this one shows something I've never seen before: What percentile does your score rank not out of just the kids who took that AP test, but out of all the 4.3 million kids in America who are the same age as you? As you can see in this graph that starts at the 90th percentile with passing scores in green, orange, and red, a remarkably small percentage passes any single AP test.)

Last week, all across America, high school students who took Advanced Placement (AP) tests in May began receiving their scores in the mail.

So now is a good time to take an in-depth look at this rite of passage. It’s grown remarkably popular. The number of AP tests taken rose from one million in 1998 to approaching 2.7 million in 2008.

This article serves both parents wondering what their kids’ AP test strategy should look like, and citizens wanting to learn more about testing so they can evaluate Judge Sonia Sotomayor’s anti-objective examination decision in the Ricci case. (Her Senate hearings begin Monday). ...

Although the College Board is responsible for both the Advanced Placement tests and the much-denounced SAT, the APs have, so far, largely escaped criticism for "disparate impact:” i.e. Non-Asian Minorities doing badly. That’s mostly because few have bothered to look as rigorously at the numbers as we’ll do here.

If you are wondering how your kid’s scores from last May compare to whole population, rest assured that a 3 will put him or her in the top 5 percent of the country on any test and in the top 1 percent on many tests.

Above is my graph "2008 AP Scores by Percentile" (click on it to make it big enough to read) For example, U.S. History (the third bar down) is the most widely attempted AP test. Yet, it’s not even tried by 92 percent of the 4.3 million kids in each year’s age cohort. And less than half of those eight percent who try it succeeds in passing it. (By the way, you only get to take each AP test once in a lifetime.)

The most widely passed test in 2008 was English Literature, with 189,000 young people scoring 3s or higher. That sounds good; however, 189,000 is merely 4.4 percent of the relevant population.

As you may have noticed by now, I’m not the most happy-clappy commentator when it comes to evaluating the intellectual capabilities of today’s youth. Yet, even I have to concede that it wouldn’t be impossible to, say, double that 4.4 percent passing rate on English Lit. The key step would be for whites in the middle of the country to imitate Asians on the coasts (currently, Asians take three times as many AP tests per capita as do whites): become more confident about signing up for AP tests and more industrious in studying for them. Asians aren’t exceptionally great at English Lit—but, currently, 9.7 percent of Asians pass that AP versus only 5.4 percent of whites.

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

We're really in deep state

2009-07-12T20:19:00.002-07:00

From the NYT:

Goldman Sachs Likely to Post Huge Profits, Analysts Say
By GRAHAM BOWLEY and JENNY ANDERSON

Most of Wall Street, and America, is still waiting for an economic recovery. Then there is Goldman Sachs.

Up and down Wall Street, analysts and traders are buzzing that Goldman, which only recently paid back its government bailout money, will report blowout profits from trading on Tuesday.

Analysts predict the bank earned a profit of more than $2 billion in the March-June period, because of its trading prowess across world markets. If they are right, the bank’s rivals will once again be left to wonder exactly how Goldman, long the envy of Wall Street, could have rebounded so drastically only months after the nation’s financial industry was shaken to its foundations.

The obsessive speculation has already begun, along with banter about how Goldman’s rapid return to minting money will be perceived by lawmakers and taxpayers who aided Goldman with a multibillion-dollar cushion last fall.

“They exist, and others don’t, and taxpayers made it possible,” said one industry consultant, who, like many people interviewed for this article, declined to be named for fear of jeopardizing business relationships.

Startling, too, is how much of its revenue Goldman is expected to share with its employees. Analysts estimate that the bank will set aside enough money to pay a total of $18 billion in compensation and benefits this year to its 28,000 employees, or more than $600,000 an employee. Top producers stand to earn millions.

On The American Conservative's blog, Dennis Dale noted this last week:

From Bloomberg, Johnathan Weil reports a US prosecutor says a stolen Goldman Sachs computer program capable of manipulating global markets may fall into the wrong hands (wrong being other than the world’s most powerful investment bank). About the first of this month Goldman notified authorities that former employee Sergey Aleynikov, not content with post-its and paper clips, ripped off the program in his last week working for the company. He was arrested getting off a plane in Newark on July 3.

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

Civil Rights v. Civil Service

2009-07-12T14:44:00.006-07:00

From the New York Times:

Trial by Firefighters
by Lani Guinier and Susan Sturm

... But the Supreme Court’s 5-to-4 decision last month — that New Haven should not have scrapped the test — perpetuates profound misconceptions about the capacity of paper-and-pencil tests to gauge a person’s potential on the job. Exams like the one the New Haven firefighters took are neither designed nor administered to identify the employees most qualified for promotion. And Ms. Torre’s identity-politics sloganeering diverts attention from what we need most: a clear-eyed reassessment of our blind faith in entrenched testing regimes.
New Haven used a multiple-choice test to measure its firefighters’ retention of information from national firefighting textbooks and study guides. Civil service tests like these do not identify people who are best suited for leadership positions.

This one sentence is the most interesting part of the op-ed: Sturm und Guinier give away the hushed up fact that "civil rights" -- as currently understood by, say, Sonia Sotomayor -- is an assault on America's once proud tradition of civil service reforms.

As you'll recall, when a disappointed government job-seeker assassinated President James Garfield, elevating the Republican ringmaster of the spoils system, Chester Arthur, to the White House, a national outcry against the politicization of lower level government jobs forced Arthur to sign a major Civil Service bill.

Objective written tests for would-be government employees originated in Imperial China, and the idea was transmitted to Europe by early Jesuit missionaries, such as the great Matteo Ricci, who were impressed by how much better China was administered than their own countries. The Chinese tests were not seemingly all that "job-related" -- they consisted of questions requiring elegant essays on the Confucian classics, with bonus points for artistic calligraphy. That doesn't, at first glance, seem to have much to do with, say, keeping the Grand Canal dredged and open to shipping. But, of course, they were tests of IQ, literacy, and diligence, which predicts a lot more about job performance than, say, who you know.

Civil service testing in the U.S. consistently improved in the 20th Century, with the PACE federal civil service test introduced in the mid-1970s being a masterpiece of state of the art social science.

Objective civil service benefited blacks in the first half of the 20th Century, with the heart of the black middle class settling in Washington D.C. because they could get federal jobs by passing blind-graded written tests.

However, as minority political power grew, minorities stopped wanting blind-graded testing extended to fight bigotry and instead wanted it rolled back to benefit themselves over more qualified job applicants. Thus, in January 1981, the outgoing Carter Administration signed a consent decree in the Luevano discrimination case junking PACE, and promising that the federal government would replace it in the future with a test that would be both predictively valid and have much less disparate impact. Of course, 28 years later, the federal government, despite its vast resources, has never been able to come up with that mythical replacement test. So, federal hiring has been based ever since on a hodge-podge of evaluative techniques, with unfortunate consequences for the competence of the federal government.

The most important skills of any fire department lieutenant or captain are steady command presence, sound judgment and the ability to make life-or-death decisions under pressure. In a city that is nearly 60 percent black and Latino, the ability to promote cross-racial harmony under stress is also crucial.

I dunno. I kind of think that knowing what the hell you are doing has something to do with leadership. And, how, exactly does promoting minorities who know less about what they are doing into leadership positions over whites promote "cross-racial harmony under stress"?

Look, I think a reasonable argument could be asserted that police jobs are so inherently political (as the etymological roots suggest) in terms of interviewing suspects and witnesses and the like that a racial quota system might make, sometimes, police departments more effective. That's a much, much harder argument to make plausible for fire departments, however, since fires don't have race.

Fire departments, like most government agencies, are monopolies, so they aren't inherently incentivized by market competition to hire the most effective managers and employees. Thus, strict civil service rules have been developed to produce objective competition for jobs. The diversicrats like Guinier and Sotomayor hate blind-graded competitions, precisely because they are honest and fair.

These skills are not well measured by tests that reward memorization and ask irrelevant questions like whether it is best to approach a particular emergency from uptown or downtown even when the city isn’t oriented that way.

Jeez, this uptown / downtown question is going to be the Regatta Question of the next three decades, isn't it? Instead of calling these kind of specious talking points "folklore," we should call them "elitelore."

As far as I can see from this essay, "uptown/downtown" is the entire factual content of their critique of the New Haven test.

The Civil Service Board in New Haven declined to certify the test not only because of concerns about difference in scores between black and white firefighters but also because it failed to assess qualities essential for firefighting.

C'mon, stop yanking our chains. The city spent a huge amount of money having a good test devised. Read Alito's opinion for the full behind the scenes play by play. The politicians only decided to change the rule after they found out what the score was. That's a violation of Hammurabi 101.

As Justice Ruth Bader Ginsburg noted in her dissent, tests drawn from national textbooks often do not match a city’s local firefighting needs.

May I respectfully suggest that Ruth Bader Ginsburg doesn't know much about fire department testing. Moreover, she's not interested in learning. Look, New Haven spent $100k having the test customized, so that's wildly misleading. Personally, I suspect a national test would have worked fine.

The point of the customization is to get minority leaders, such as the black guy who is #2 in the NHFD, to agree that the test is fair and valid -- which he did. As Alito pointed out, the mayor's staff maneuvered to keep the black deputy chief's opinion of the test's fairness hushed up.

Most American fire departments have abandoned such tests or limited the multiple-choice format to 30 percent or less of an applicant’s score. In New Haven, the test still accounted for 60 percent of the score.

Gosh, why do you think so many fire departments have gone over to subjectively graded tests where the judges can see the race of the applicant? In order to racially discriminate. (This really isn't that complicated.)

Compounding the problem, insignificant numerical score differences were used to rank the firefighter candidates.

This is the kind of thing that people say after the game has been played and they know the outcome. "Hey, when our would-be tying baserunner got tagged out by the catcher at home plate with two outs in the 9th inning, he was only 3 inches from scoring, so therefore, there should be like a 3 inch wide penumbra around home plate that counts the same as home plate, so we shouldn't have lost!" Obviously, when you put it that way, you can see the special pleading involved. But people don't think as rigorously about law and public policy as they about baseball, so this kind of sophistry is very appealing to the Who? Whom? crowd.

Guinier rolls on:

What should a city do when its promotion test puts a majority of its population at a disadvantage and is also unlikely to predict essential job performance? People who excel on such a test may expect to be promoted. But testing should not be about allocating prizes to winners. No one has a proprietary right to a particular open job, even if that person worked hard preparing for a test.

There's a basic rule of ballfield fairness that you don't wait to see what the final score is and then change the rules to benefit one side.

When a city replaces a bad test, as New Haven wanted to do, the employees who did well on it do not lose their right to compete for promotions; they merely need to compete according to procedures that actually identify people who advance the mission of saving lives and property — and enhance the department’s reputation in the community for treating all citizens with respect.

All the evidence that it was a "bad test" was ginned up post hoc, after the results were in. The city had spent a lot of money to have a legally defensible test, but, having seen the results, it junked it.

Yet many Americans believe so strongly that tests are fair that they never question the outcomes, especially when those outcomes conform to stereotypes about people of color. Such preconceptions lead to the conclusion that blacks or Latinos who don’t do well must lack individual initiative or ability.

I wonder where those stereotypes come from?

The basic statistical fact is that, relatively on average, blacks and Latinos lack individual initiative and ability. But you can get Watsoned out of your job for pointing that out in public.

As the plaintiff in the New Haven case, Frank Ricci, declared, “If you work hard, you can succeed in America.” His lawyer went further: White officials who voted for a better assessment system must have been lowering “the professional standard of competence,” she said, “for the sake of identity politics.” Yet, in New Haven, no one was promoted instead of the white firefighters.

Jeez, the politically favored folks got "acting" promotions. Can't the NYT afford better dissimulators than these two?

In fact, many fire departments with a history of discrimination, like New Haven’s, still stack the deck in favor of candidates who have relationships to people already in the fire department. Those without $500 for the study materials or a relative or friend from whom they might borrow the books were put at a disadvantage.

Those damn "fire buffs" are racist because they try hard to learn their jobs.

Moreover, it was the firefighters union — which sided with the white firefighters in the Supreme Court — that negotiated the contractual mandate giving disproportionate weight to the multiple-choice test. Those negotiations occurred two decades ago when the leadership of the department was virtually all white.

So, the guys who will be risking their lives under the officers wanted the officers selected by a method that is at least 60% objective and blind-graded. You'll note that the 40% that was oral was rigged by the city in 2003 by having two out of three judges on the panels be minorities.

Taking this into account, after five days of public hearings, Malcolm Webber, one of the white members of the New Haven Civil Service Board, said: “I’ve heard enough testimony here to give me great doubts about the test itself and the testing — some of the procedures. And I believe we can do better.”

Oh, come on... Please read Justice Alito's account of what really happened in this charade.

Unfortunately, the Supreme Court blessed entrenched testing regimes that do not advance public goals and fell for the story about identity politics run amok. That doesn’t mean, though, that cities need to hire and promote firefighters who are “book smart” but “street dumb.”
Fortunately the court left room for municipalities to develop alternative assessments to promote people with the skills needed to advance public safety in a diverse citizenry. Indeed, most American fire departments have already rejected written tests in favor of “assessment centers” that simulate on-the-job challenges and focus on problem-solving in the relevant context. In so doing, city officials demonstrate that their decisions are wiser than the Supreme Court’s.

In other words, let's use testing methods where the judges can see the race of the applicant, so a proper thumb can be put on the scale.

Lani Guinier, a Harvard law professor, and Susan Sturm, a Columbia law professor, are the authors of “Who’s Qualified?”

The jokes write themselves.

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

The Economist: California v. Texas

2009-07-11T13:49:00.004-07:00

The Economist has an editorial comparing California and Texas combining its usual unthinking prejudices with some actual insights (likely drawn from my stuff).

It's not surprising that a lot of the politicians most responsible for the Minority Mortgage Meltdown in California -- such as George W. Bush, Karl Rove, and Clinton's HUD Secretary (and later Countrywide director and frontman on its trillion dollar pledge of lending to the "underserved") Henry Cisneros -- are Texans. Their policies weren't incredibly harmful in Texas, which they understood fairly well, but were in California, which they didn't.

Do keep in mind that California was much more impacted by immigration over the last generation than Texas: in the 2000 Census, 26% of California's residents were foreign-born versus only 14% of Texas's.

AMERICA’S recent history has been a relentless tilt to the West—of people, ideas, commerce and even political power. California and Texas, the nation’s two biggest states, are the twin poles of the West, but very different ones. For most of the 20th century the home of Silicon Valley and Hollywood has been the brainier, sexier, trendier of the two: its suburbs and freeways, its fads and foibles, its marvellous miscegenation have spread around the world. Texas, once a part of the Confederacy, has trailed behind: its cliché has been a conservative Christian in cowboy boots, much like a certain recent president. But twins can change places. Is that happening now?

It is easy to find evidence that California is in a funk (see article). At the start of this month the once golden state started paying creditors, including those owed tax refunds, business suppliers and students expecting grants, in IOUs. ...

Plenty of American states have budget crises; but California’s illustrate two more structural worries about the state. Back in its golden age in the 1950s and 1960s, it offered middle-class people, not just techy high-fliers, a shot at the American dream—complete with superb schools and universities, and an enviable physical infrastructure. These days California’s unemployment rate is running at 11.5%, two points ahead of the national average. In such Californian cities as Fresno, Merced and El Centro, jobless rates are higher than in Detroit. Its roads and schools are crumbling. Every year, over 100,000 more Americans leave the state than enter it.

... Not that Californian government comes cheap: it has the second-highest top level of state income tax in America (after Hawaii, of all places).

Why is it surprising that the state with the nicest climate and the state with the second nicest climate have the highest and second highest state income taxes? California's income taxes are intended to exploit people willing to pay heavily to live in California. For example, golfer Freddie Couples lives in Santa Barbara because he can afford to live anywhere. In contrast, a skinflint like Tiger Woods officially moved from his native California to income-tax free Florida on the day he turned pro in 1996 to evade the California income tax.

Indeed, high taxes, coupled with intrusive regulation of business and greenery taken to silly extremes, have gradually strangled what was once America’s most dynamic state economy. Chief Executive magazine, to take just one example, has ranked California the very worst state to do business in for each of the past four years.

By contrast, Texas was the best state in that poll. It has coped well with the recession, with an unemployment rate two points below the national average and one of the lowest rates of housing repossession. In part this is because Texan banks, hard hit in the last property bust, did not overexpand this time. But as our special report this week explains, Texas also clearly offers a different model, based on small government. It has no state capital-gains or income tax, and a business-friendly and immigrant-tolerant attitude.

... And as happens to fashionable places, some erstwhile weaknesses now seem strengths (flat, ugly countryside makes it easier for Dallas-Fort Worth to expand than mountain-and-sea-locked LA ...

That's connection between topography, home prices, and politics is straight out of my stuff.

Texas also gets on better with Mexico than California does.

Let's unpack that "immigrant-tolerant" idea a bit. California is clearly more liberal than Texas, so ideologically Californians are supposed to be more "pro-diversity," but that works out as true mostly in theory and in public pronouncements. As I've long pointed out, elite Californians feel very little cultural connection to their Latino servitors. California's elites find nothing more boring than Mexicans. In contrast, Texas has a more rough-hewn culture, including at the elite level, so Texans tend to feel more in common culturally with immigrants from culturally-backward Mexico.

Also, there are some old elite Mexican-American families in San Antonio who fled the Mexican Revolution of a century ago who are part of the Texas Establishment. In California, there aren't any elite old money Mexican-American families that I can think of. (There are WASP families in Pasadena who have one or two land grant Californio grandees in their family trees -- enterprising Bostonians and New Yorkers were already taking over California by marrying the daughters of rich landowners before the U.S. military made it official -- but that's about it.)

And, it's not uncommon for rich Mexicans from Monterrey to visit Houston for shopping and surgery, although they are most likely to move to Miami. In contrast, rich Mexicans avoid Los Angeles like a plaguespot -- too many poor Mexicans here, I guess.

In general, Texas and northeastern Mexico, the most advanced part of Mexico, aren't particularly divided by topography, so there are more business contacts, whereas California is separated from the bulk of the Mexican population by an unpopulated desert in northwestern Mexico.

So, the political dynasties of Mexico and Texas, such as the Salinases and the Bushes, are quite friendly with each other, while Mexican political corruption in California is largely home-brewed.

American conservatives have seized on this reversal of fortune: Arthur Laffer, a Reaganite economist, hails the Texan model over the Gipper’s now hopelessly leftish home. Despite all this, it still seems too early to cede America’s future to the Lone Star state. To begin with, that lean Texan model has its own problems. It has not invested enough in education, and many experts rightly worry about a “lost generation” of mostly Hispanic Texans with insufficient skills for the demands of the knowledge economy.

Actually, Hispanic Texans do much better on the National Assessment of Educational Proficiency exams than California Hispanics: 26% of Texas Hispanics score Proficient or Advanced on 8th Grade Math versus 11% of California Hispanics.

In general, Mexican-Americans appear to thrive more in a cultural and economically conservative Republican state. Liberal policies, in contrast, works best in a high IQ / highly cooperative state with few NAMs, such as Minnesota.

Now immigration is likely to reconvert Texas from Republican red to Democratic blue; Latinos may justly demand a bigger, more “Californian” state to educate them and provide them with decent health care. But Texas could then end up with the same over-empowered public-sector unions who have helped wreck government in California.

The problem is that, as traditional tax-and-spend voters, Mexicans subvert conservative politics in a state, both adding Democratic voters and driving out Republican voters. Thus, California, which voted GOP in 9 of 10 Presidential elections from 1952 through 1988 has voted Democratic five elections in a row. Over 90% of Hispanic elected officials are Democrats.

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

Female Journalism

2009-07-11T00:54:00.008-07:00

The Washington Post has a long article about "colorism" and Michael Jackson by DeNeen L. Brown.

Through the Past, Darkly
The Legacy of Colorism Reflects Wounds of Racism That Are More Than Skin-Deep...

Here's an interesting (although hardly unexpected) factual excerpt:

The most provocative research, he says, is related to marriage. Among black women younger than 30, there is "a premium associated with light-skinned complexion," Hamilton says.

"There is a well-established literature of colorism, a preference for lighter-skinned individuals," according to a report called "Shedding 'Light' on Marriage," which was co-written by Hamilton; Arthur H. Goldsmith, a professor at Washington and Lee University; and William A. Darity Jr., a professor at Duke University. "We find that the light-skin shade as measured by survey interviewers is associated with about a 15 percent greater probability of marriage for young black women, and light-skin shade as measured by self-reported biracial status is associated with the presence of better educated and higher-earning spouses for married black females."

But the rest is just the usual, with the now traditional ending: a celebration of Michelle Obama's skin tone. As I've mentioned before, a remarkable fraction of female journalistic output, at least the most heartfelt stuff, consists of demands for society to change so that that particular female journalist would be considered hotter looking.

What's striking is how humorless these demands for social revolution in the service of enhanced personal hotness have been since feminism came along. I don't think it was always like this. In 1937, for example, Dorothy Parker lamented, "Men seldom make passes / At girls who wear glasses."

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

The goal of the Sotomayor hearings ...

2009-07-11T00:33:00.003-07:00

... shouldn't be to try to show that she's outside the liberal mainstream, but to show what the liberal mainstream actually is.

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

On VDARE.com: My questions for Sotomayor

2009-07-10T00:46:00.004-07:00

My new VDARE.com column about the Sotomayor hearings scheduled to start on Monday are up.

Once again, my best suggestion for dramatizing Ricci v. DeStefano is for the Republican senators to call Mayor John DeStefano of New Haven as a hostile witness.

The witness lists released today includes Frank Ricci and Ben Vargas, the Hispanic plaintiff in the suit who was violently assaulted and knocked unconscious in 2004 in a racial assault for standing up for his legal rights. But no mayor of New Haven.

The Democrats are calling as witnesses the mayor of New York and a baseball player, whose most famous legal experience was getting sued for $1.8 million by three women to whom he exposed himself while in the bullpen.

Here are a few of my questions for Judge Sotomayor:

- Much as Chief Justice John Roberts asked during oral arguments over Ricci… Can you assure us, Judge Sotomayor, that your decision in Ricci for the City of New Haven would have been the same if minority firefighters scored highest on this test in disproportionate numbers, and the City said, "We don't like that result, we think there should be more whites on the fire department, and so we're going to throw the test out?"

- On the South Wall of the Supreme Court Building’s courtroom are carvings of the "great lawgivers of history." The second earliest lawgiver depicted is Hammurabi, king of Babylon, who is honored for carving the laws in stone and putting them up in public—which meant that even the king couldn’t change the laws after the fact to suit his convenience. Why should Mayor DeStefano enjoy the privilege that King Hammurabi denied himself: to see what the final score turned out to be, then change the rules of the game?

- In the Obama Administration’s friend of the court brief to the Supreme Court on the Ricci case, the Obama Administration called for your decision for summary judgment in favor of Mayor DeStefano to be overturned and the Ricci case to be remanded to local district court for retrial on the facts. Why did you vote for a more extremist outcome than the Obama Administration later called for?

Read the whole thing

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

What do Ali G, Borat, and Bruno have in common?

2009-07-09T17:45:00.007-07:00

Sacha Baron Cohen's first and best character was Ali G, a Muslim. (He later claimed Ali G was short for "Alister Graham," but that can't be squared with Ali G's references to his "Uncle Jamaal.")

Baron Cohen's second, and second best, character was Borat, a Slav. (He's based on a Russian, was originally portrayed as a Moldovan, then an Albanian, and finally wound up being attributed to far off Kazakhstan -- i.e., Cossackstan in Baron Cohen's imagination.)

Bruno, his third and worst character, is an Austrian.

It's remarkable how the creative imagination works. What possible common denominator could there be among Muslims, Slavs, and Teutons? We shall probably never find out.

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

Panhandling

2009-07-09T13:24:00.002-07:00

I'm gearing up for my mid-year panhandling project, which always involves figuring out why Paypal and Amazon aren't working right anymore. Right now, you can make a tax-deductible donation through VDARE.com:

http://vdare.com/asp/donate.asp#sailer

Once they get enough money in, they can put up my article on questions to ask Judge Sotomayor at her Senate hearings next Monday.

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

Our long national nightmare is almost over

2009-07-08T20:44:00.010-07:00

Sacha Baron Cohen's seemingly interminable pre-opening weekend promotional campaign is coming to its inevitable end with this Friday's debut of Bruno.

To be succeeded, of course, by Baron Cohen's opening weekend promotional campaign for Bruno, his post-opening weekend promotional campaign, his Japanese, Brazilian, and Australasian promotional campaigns, his DVD release campaign, his Blu-Ray campaign, and his Director's Cut campaign. It's a dog's life, but they are paying him $44 million for it.

By the way, here's my 2006 review of Borat, which pointed out something that practically nobody else mentioned about that critically-lauded film.

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

NYT: Emily Bazelon interviews Ruth Bader Ginsburg on Sonia Sotomayor!

2009-07-08T19:25:00.013-07:00

Although there are still pockets of injustice in America, such as those blue collar families in the New Haven area who keep minorities down by encouraging and instructing their own sons in the study of how best to rescue people from burning buildings, it's heart-warming to see that a complete outsider like Emily Bazelon can become the MainStream Media's all-purpose Supreme Court oracle, despite her suffering from such unfair hindrances as being a woman, a relative of best-selling feminist Betty Friedan, the granddaughter of the most powerful non-Supreme Court judge in America during her childhood (David Bazelon), having some kind of wacky Truman Capote Creative Writing fellowship at Yale Law School, and suffering from PCS (Pervasive Cluelessness Syndrome).

In this long interview in the New York Times, Bazelon asks Ginsburg the kind of fearless, hard-hitting questions you'd expect from her, such as:

Q: Can I bring up the Ricci case, brought by the New Haven firefighters?

In her unintentionally revealing way, though, Bazelon does allow us to get an eye-opening view of Judge Ginsburg's judicial philosophy, which, to summarize the interview, would appear to consist primarily of:

Q. Who?
A. Women!
Q. Whom?
A. Men!

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

A surprisingly sophisticated GOP report on the Mortgage Meltdown

2009-07-08T15:43:00.006-07:00

Republican staffers on the Committee on Oversight and Government Reform (Darrell Issa (CA-49), Ranking Member) have penned a lengthy report on The Role of Government Affordable Housing Policy in Creating the Global Financial Crisis of 2008. Despite the inevitable partisan tendentiousness -- no mention of George W. Bush's White House Conference on Increasing Minority Homeownership, too much blame on Fannie and Freddie, not enough blame on businesses and deregulation -- it turns out to be better than you'd expect.

Here's the first paragraph:

The housing bubble that burst in 2007 and led to a financial crisis can be traced back to federal government intervention in the U.S. housing market intended to help provide homeownership opportunities for more Americans. This intervention began with two government-backed corporations, Fannie Mae and Freddie Mac, which privatized their profits but socialized their risks, creating powerful incentives for them to act recklessly and exposing taxpayers to tremendous losses. Government intervention also created “affordable” but dangerous lending policies which encouraged lower down payments, looser underwriting standards and higher leverage. Finally, government intervention created a nexus of vested interests – politicians, lenders and lobbyists – who profited from the “affordable” housing market and acted to kill reforms. In the short run, this government intervention was successful in its stated goal – raising the national homeownership rate. However, the ultimate effect was to create a mortgage tsunami that wrought devastation on the American people and economy. While government intervention was not the sole cause of the financial crisis, its role was significant and has received too little attention.

This report resembles a better documented, better informed but more coy version of my June 2008 Taki article The Diversity Recession. It underplays how much the politicians were pushing on an open door among lenders, more than a few of whom thought handing out zero down liar loans was a great moneymaking idea.

Some highlights:

In the early 1990s, Fannie and Freddie began to come under considerable pressure to lower their underwriting standards, particularly on the size of down payments and the credit quality of borrowers. A deeply flawed 1992 study published by the Federal Reserve Bank of Boston, purporting that minorities faced discrimination in mortgage lending, was particularly influential at the time. ...

Yet the damage had been done and Congress seized on the study as part of a major legislative reorganization of the GSEs’ function. In 1992, Congress passed the Federal Housing Enterprises Financial Safety and Soundness Act, which created an “affordable housing mission” for Fannie Mae and Freddie Mac. This legislation directed HUD to establish three separate quotas requiring the GSEs to set aside a certain percentage of their yearly mortgage purchases to loans with affordable characteristics. These quotas were expressed as the minimum share of mortgages that Fannie and Freddie purchased every year which had to be made to “low and moderate-income families … low-income families in low-income areas and very low-income families,” as well as borrowers in “central cities, rural areas, and other underserved areas.” Congress granted HUD the authority to adjust these three affordable housing quotas for the GSEs over time, allowing both Democratic and Republican Administrations to consistently make campaign promises to boost homeownership through government intervention in the market. Consequently, under both the Clinton and Bush Administrations, HUD dramatically increased these quotas, which reached their zenith when the Bush Administration raised them to 56 percent, 27 percent and 39 percent, respectively.

HUD’s affordable housing quotas represented major departures from the GSEs’ prior commitment to underwriting only sustainable mortgages. Fannie Mae’s original congressional charter acknowledged the risks involved in low down payment loans because it allowed Fannie to purchase loans with less than a 20 percent down payment only in concert with certain mitigating factors such as private mortgage insurance or a repurchase agreement with the mortgage originator. The establishment of the HUD quotas broke this convention and set the stage for the dramatic politicization of mortgage lending.

In 1994, Fannie Mae CEO Jim Johnson announced the company’s first affordable housing initiative, the $1 trillion “Opening the Doors to Affordable Housing” program. Johnson, a long-time friend of both President Clinton and Treasury Secretary Robert Rubin, took the helm of Fannie in 1991 after a stint at Lehman Brothers. ...

In 1995, Johnson seeded the Fannie Mae Foundation with $350 million of Fannie stock. The company used this foundation to spread millions of dollars around to politically connected organizations like the Congressional Hispanic Caucus Institute. It also hired well-known academics to write papers that gave an aura of academic rigor to policy positions favorable to Fannie Mae. For example, one paper coauthored by now-Director of the Office of Management and Budget Peter Orszag, concluded that the chance was minimal that the GSEs were not holding sufficient capital to cover their losses in the event of a severe economic shock. The authors suggested that “the risk to the government from a potential default on GSE debt is effectively zero,” and that “the expected cost to the government of providing an explicit government guarantee on $1 trillion in GSE debt is just $2 million." As of May 14, 2009, the taxpayers had already been exposed to $700 billion of GSE bailouts. ...

While CRA [Community Reinvestment Act] cannot be directly blamed for the huge volumes of risky nonprime mortgages that were eventually purchased by Fannie, Freddie and Wall Street investment houses, CRA continued a pattern of behavior of lowering mortgage underwriting standards in order to drive up the national homeownership rate.

The other important event of 1995 was the release of the Clinton Administration’s National Homeownership Strategy. The document’s foreword, penned by HUD Secretary Henry Cisneros, cited President Clinton’s directive to “lift America’s homeownership rate to an all-time high by the end of the century.” Among the methods the Strategy proposed to achieve this bump in the homeownership rate was lower down payments.

In retrospect, President Clinton’s rebranding of prudent down payments of 10 to 20 percent as “barrier[s] to home purchase” takes on great significance. As with the 1995 CRA reform and the Clinton Administration’s decision to allow the GSEs to count subprime loans toward their affordable housing goals, this represented a shift in government policy from one that emphasized equity of procedure to equity of outcome. This emphasis on equity of outcome inevitably created tremendous pressure on regulated institutions to make more loans to low-income borrowers. It also created pressure for secondary market investors such as Fannie Mae and Freddie Mac to buy these loans. The correspondingly lower emphasis on how the loans were being made inevitably meant less attention would be paid to their quality and sustainability.

Let me interrupt to discuss the general question of Deep Roots for Recent Problems. Every political viewpoint has its favorite Deep Roots theories and scoffs at the other sides Deep Roots. For example, liberals denounce the idea that the 1977 CRA had anything to do with the housing crash 30 years later, while simultaneously proclaiming that the 1978 Proposition 13 is the main cause of California's current budget problems. The difficulties that minority firemen in New Haven in the 21st Century have understanding the intricacies of water pressure stem from slavery, Jim Crow, and discrimination up through the early 1970s.

So, let's take a look at, say, the failure of the three ratings agencies in this decade to properly alert investors to the riskiness of complex mortgage-backed securities. The roots go back to 1970s when the rating agencies switched from getting paid by buyers of bonds to getting paid by issuers of bonds. Along with the government making the Big 3 ratings agencies into a de facto cartel in 1975, that wrecked the incentives for honest behavior. And yet, the ratings firms didn't completely whore themselves out for decades. Why? Because that would be wrong. The problem is that years of virtuous behavior resisting bad incentives just make the blow-up when the players finally embrace the Dark Side all that much worse because others built in expectations of continued goodness.

Eventually, greedier owners, such as Warren Buffett, who bought 20% of Moody's, inclined the firms to prostitute themselves more. The firms could get away with it for a number of years because they had spent a long time not prostituting themselves, so the bad incentive structure didn't seem as relevant. Still, note that they screwed up worst of all in mortgage-backed securities. That was for a variety of reasons, such as less experience in a down market and, importantly, the general government and social pressure in favor of DiversityLending and the recurrent Anti-HateFact Awareness campaigns.

As Henry Canaday has pointed out, it's not a coincidence that the financial system blew a gasket at exactly the place where the most political and cultural pressure was exerted: mortgages for minority and lower income households.

Risky mortgage lending, particularly loans with very low down payments, contributed directly to the rise of a housing bubble. Had this risky lending been contained within the low-income segment of the market targeted by politicians advocating more “innovation” in “affordable lending,” the damage to the wider economy might have been minimal. ...

Although the erosion of mortgage underwriting standards began in Washington with initiatives like the CRA as a way to reduce “barriers to homeownership,” this trend inevitably spread to the wider mortgage market. One observer noted:
Bank regulators, who were in charge of enforcing CRA standards, could hardly disapprove of similar loans made to better qualified borrowers. This is exactly what occurred.

Borrowers – regardless of income level – took advantage of the erosion of underwriting standards that started with government affordable housing policy. As one study observed,“[o]ver the past decade, most, if not all, the products offered to subprime borrowers have also been offered to prime borrowers.” For example, Alt-A and adjustable-rate mortgages became incredibly popular with borrowers – who were generally not low-income – engaging in housing speculation. ...

Once government-sponsored efforts to decrease down payments spread to the wider market, home prices became increasingly untethered from any kind of demand limited by borrowers’ ability to pay.

Government actions distorted the housing market, yet advocates of affordable housing policies, such as Congressman Barney Frank (D-MA), have asserted that those who criticize these policies seek to place blame for the financial crisis solely on borrowers of modest means. This misses the mark entirely. In fact, responsibility for the erosion of mortgage lending standards, which began with government affordable housing policy, rests squarely on the policy makers who advocated these ill-conceived policies in the first place. Borrowers quite naturally responded to the incentives they were given, irrespective of their socioeconomic status, and risky lending spread to the wider mortgage market.

Well, I think financial buccaneers like Angelo Mozilo, Roland Arnall, and Kerry Killinger who pocketed hundreds of millions from lending to deadbeats deserve some share of the blame, too. But that's just my personal opinion.

The report goes on to discuss "Special Interests: The Rise of the 'Affordable' Housing Coalition:"

Fannie Mae and Freddie Mac would ultimately announce over $5 trillion in affordable housing initiatives. Many of these loans came increasingly from large non-bank mortgage lenders like Countrywide Financial Corporation, the country’s largest mortgage lender and a major innovator in pushing subprime loans. These non-bank lenders rose to fill the void in mortgage lending left in the wake of the savings and loan crisis, and they grew rapidly in response to government policies that encouraged lower lending standards. A symbiotic relationship developed between these non-bank lenders and the GSEs. For example, Fannie Mae under CEO Jim Johnson reached a “strategic agreement” with Countrywide CEO Angelo Mozilo, under which “Countrywide agreed to deliver a large portion of Fannie’s annual loan volume in exchange for special financing terms." In fact, Countrywide regularly accounted for 10 to 30 percent of all the loans purchased by Fannie Mae in a given year. In the words of Mozilo: “If Fannie and Freddie catch a cold, I catch the f***** flu."

Unlike here at iSteve, the GOP report doesn't use asterisks.

All this raises the usual problems of disentangling cause-and-effect in history. A Fannie-centric view of what went wrong runs into the problem that Fannie and Freddie were hamstrung in 2003 and 2004 by exposure of their giant stock manipulation scandals. As the GOP report explains:

In 2003, Fannie Mae and Freddie Mac were at the height of their power. They dominated the secondary mortgage market, including a combined exposure of $372 billion to subprime mortgages made to borrowers with FICO scores below 660, 81 percent of the total market. Wall Street firms were responsible for a mere 19 percent of this market. However, accounting scandals were about to hammer the GSEs’ share prices, threaten their market share, and create an urgent need for a pro-active political influence strategy to blunt calls for reform.

During those years, Wall Street firms rushed into take over the traditional role of the GSEs. They were egged on by the Bush Administration's October 15, 2002 White House Conference on Increasing Home Ownership, where Bush called for adding 5.5 million more minority homeowners through, in effect, zero downpayment liar loans.

The GOP report doesn't mention that, but it puts forward an interesting argument its blame Fannie/Freddie quest:

Similarly, Wall Street investment houses like Lehman Brothers, Bear Stearns, and Merrill Lynch, which came to specialize in packaging and investing in the lowest-quality tranches of mortgage-backed securities, profited hugely from the increased volume that government affordable lending policies sparked. Private-label securitization of subprime mortgages grew from $60 billion-a-year in 1997 to nearly $500 billion-a-year by 2006. These firms could not compete in any segment of the market Fannie and Freddie chose to close off to them because the GSEs could always undercut Wall Street’s costs by virtue of their government-granted competitive advantages. However, as with the GSEs’ relationship to non-bank lenders such as Countrywide, Wall Street formed its own symbiotic relationship with Fannie and Freddie. Wall Street firms profited from buying and selling GSE mortgage-backed securities, which because of the government backing were deemed to be as safe as Treasury bonds – but with a higher yield. For their part, the GSEs became the largest purchasers of the “AAA”-rated tranches of Wall Street’s private-label securities, while Wall Street invested in the lower-quality portions. However, without the GSEs’ participation, it is unlikely that Wall Street could have
formed these pools of toxic mortgages, making Fannie and Freddie the indispensable actors in the subprime market. This resulted in consistent downward pressure on down payments and on the credit quality of borrowers, fueling the housing bubble.

But it would be more persuasive if it at least mentioned the Bush Push.

Then, in 2005-2006, the most idiotic years for lending, the revitalized GSE's fought back against their declining market shares and poured zillions into bad mortgages. The report notes:

In response, Fannie Mae and Freddie Mac sought protection from their strongest political protectors, the advocates of high-risk affordable lending. The GSEs essentially doubled down on risky low down payment lending to shore up support on Capitol Hill and fend off attempted regulation. GSE congressional supporters, many of whom sat on key committees charged with oversight of the housing and mortgage industries, made repeated public statements in support of the push to reduce the quality of underwriting at the GSEs and to block congressional efforts at better regulation.

For example, at a hearing of the House Financial Services Committee on the GSE accounting scandals, Congresswoman Maxine Waters (D-CA) publicly praised the GSEs for implementing their “affordable housing mission, a mission that has seen innovation flourish, from desktop underwriting to 100 percent [zero-down payment] loans.”

And in a speech delivered at the swearing-in ceremony of the Congressional Black Caucus in 2005, Franklin Raines’ successor, Fannie Mae CEO Daniel Mudd, sent a clear signal to congressional advocates of loosened lending standards that his company sought political cover in order to blunt efforts to address the serious structural problems posed by the GSEs. Mudd told the assembled Members that he was “humbled…to reaffirm the friendship and the partnership between Fannie Mae and the Congressional Black Caucus,” and noted that “[s]o many of you have been good friends to Fannie Mae and our [affordable housing] mission…You’ve been friends through thick and thin.” In reference to the accounting scandal, Mudd noted:
We have indeed come upon a difficult time for Fannie Mae. There is much to be done inside my company and I humbly ask you to help us and to help me. If there are areas where we are missing, if there are areas where we could do better, we’d like to hear it from our friends and I’d be so bold as to say, our family first.

He noted pointedly that “Fannie Mae has lent more money to more minorities and more underserved individuals than any single company in history,” and reassured Members that “you will see Fannie Mae reaching out and listening to the [Congressional Black] Caucus” and opined that “you are also the conscience of Fannie Mae, keeping us on course to serve those who need serving most.”

This speech by Fannie Mae’s CEO reveals much about the unique relationship between the GSEs and congressional advocates of lower mortgage lending standards. The company was desperate to maintain its unfair competitive advantages granted by Congress in the wake of the accounting scandals and increased calls to strip it of some of those privileges. Its leadership clearly decided that the best strategy was to play up the politically popular albeit short-sighted goal of lowering their standards in order to increase the national homeownership rate and please their political benefactors. That the effect of this strategy was to trap Americans in unsustainable mortgages and feed the growth of a housing bubble merely heaped insult upon injury.

So, whose fault was this pattern of political and private interests leapfrogging each other to doom?

The usual categories of conventional thinking -- Republican vs. Democrat, business vs. government, libertarian vs. regulatory, etc. -- aren't very useful here because it was a total systemic screw-up. And those occur precisely when the culture's approved divisions of thought are inadequate, when what All-Right Thinking People think about the Sacred Verities are wrong, and only a few people who have been marginalized for their Evil Thoughts are right.

Ultimately, the most reasonable attribution of blame falls foremost on our culture's most sacred mindset: anti-skepticism about minorities. Decades of demonizing realistic thought about race came back to bite us.

From a purely theoretical point of view, where else would we be most likely to get ripped off other than from a direction we are not allowed to worry about?

Strikingly, the GOP report does tiptoe up to the edge of reporting HateStats:

Indeed, according to the U.S. Census Bureau, Latino homeownership increased by 47 percent during the housing bubble, from 4.1 million to 6.1 million between 2000 and 2007. This was an astonishing rate of increase at a time when the national homeownership rate rose by just 8 percent.

The report concludes with some big numbers:

During the House Oversight and Government Reform Committee’s investigation starting, in the fall of 2008, it became clear that Fannie Mae and Freddie Mac were in fact leaders in risky mortgage lending. According to an analysis presented to the Committee, between 2002 and 2007, Fannie and Freddie purchased $1.9 trillion of mortgages made to borrowers with credit scores below 660, one of the definitions of “subprime” used by federal banking regulators. This represents over 54% of all such mortgages purchased during those years. If one factors in Alt-A and adjustable-rate mortgages, this analysis found that, at the end of 2008, Fannie and Freddie were still exposed to $1.6 trillion of risky default-prone loans. Thus, at year-end 2008, Fannie Mae and Freddie Mac were responsible for 34 percent of all outstanding subprime mortgages and 60 percent of all outstanding Alt-A mortgages in the United States.

... nonprime loans, which accounted for only 34% of the GSEs’ risk exposure at the end of 2008, were suffering a 6% delinquency rate, accounting for 90% of the GSEs’ losses. Put another way, the GSEs’nonprime loans were 14 times more likely to be in serious delinquency than their prime loans. In the end, failures on nonprime GSE mortgages may account for the failure of roughly 1 in 6 home mortgages in the U.S., or 8.8 million foreclosures. ...

These statistics are alarming enough on their own, but the real tragedy of the
government’s affordable housing policy is the impact on average Americans, particularly those of modest means. Millions of these borrowers, who were supposed to have been helped by federal affordable housing policy, have now been forced into delinquency and foreclosure, destroying their asset base, their credit, and in some cases their families. For example, Latino homeowners, who once appeared to be among the most frequent beneficiaries of affordable housing policies, are now the victims of the policies that their political representatives in Washington once championed. According to the Pew Hispanic Center, nearly one-in-ten Latino homeowners said they had missed a mortgage payment or were unable to make a full payment, while 3 percent said they have received a foreclosure notice in the past year. At the same time, 62 percent of Latino homeowners said there have been foreclosures in their neighborhoods and 36 percent say they are worried about their own homes going into foreclosure.

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

My Taki column: Good Cop Movie, Bad Cop Movie

2009-07-08T15:37:00.003-07:00

In my Wednesday Taki's column, I compare "Public Enemies" with Johnnie Depp as John Dillinger and Christian Bale as Melvin Purvis to a recent, better-executed cops and robbers movie.

Read it there and comment upon it here.

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

Amnesty: Our betters are back at it

2009-07-07T22:56:00.004-07:00

The Washington Post reports:

A bipartisan task force will recommend today that the United States overhaul its immigration system in response to national security concerns, saying that the country should end strict quotas on work-based immigrant visas to maintain its scientific, technological and military edge.

"The continued failure to devise and implement a sound and sustainable immigration policy threatens to weaken America's economy, to jeopardize its diplomacy, and to imperil its national security," concluded an independent Council on Foreign Relations panel, co-chaired by former Florida governor Jeb Bush (R) and former Clinton White House chief of staff Thomas V. "Mack" McLarty III....
The panel also recommended "earned legalization, not amnesty" for an estimated 12 million illegal immigrants now living in the United States, requiring those who wish to stay to work, pay taxes, learn English, pass background checks, pay fines and wait their turn behind legal immigrants. ...
Edward Alden, the task force's director and a CFR fellow, said the involvement of Bush, a prominent national Republican and the brother of former president George W. Bush, and McLarty, a Democrat and senior international fellow at the U.S. Chamber of Commerce, was intended to create political space for centrists in both parties.

"Politically what this group shows is a consensus is possible on this issue," Alden said. "There is a commitment on all sides of the political debate to much tougher and more consistent enforcement . . . The trade-off on the other side is, you've got to have a flexible enough system in which it will be possible to adjust" employer-based immigration based on economic conditions, he said.

Also serving on the 19-member panel were Eliseo Medina, international executive vice president of the Service Employees International Union; Raul H. Yzaguirre past president and chief executive officer of the National Council of La Raza; Robert C. Bonner, former head of U.S. Customs and Border Protection and the Drug Enforcement Administration; and Richard D. Land, president of the Southern Baptist Convention's ethics and religious liberty commission.

These kind of efforts to slide amnesty by us by assembling an Establishment Republican and Democrat coalition of the Great and the Good always remind me of Guy Crouchback's reaction to the Hitler-Stalin Pact at the beginning of Evelyn Waugh's WWII trilogy, Sword of Honor:

Just seven days earlier he had opened his morning newspaper on the headlines announcing the Russian-German alliance. News that shook the politicians and young poets of a dozen capital cities brought deep peace to one English heart . ... But, now, splendidly, everything had become clear. The enemy at last was plain in view, huge and hateful, all disguise cast off. It was the Modern Age in arms. Whatever the outcome there was a place for him in that battle.

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

President disses Vice President

2009-07-07T19:47:00.005-07:00

From the LA Times:

President Obama, issuing an unusual clarification of his vice president's words, said today that his administration has "absolutely not" given its blessing for an Israeli attack on Iran.

Obama said that though Israel has the right to defend itself, U.S. officials have emphasized the need to avoid "major conflict in the Middle East."

Vice President Joe Biden created a stir Sunday by suggesting that the United States would stand aside if the Israelis wanted to attack.

"Israel can determine for itself -- it's a sovereign nation -- what's in their interest and what they decide to do relative to Iran and anyone else," Biden said on ABC's "This Week."

Biden's words set off a debate over whether the White House was hardening its line on Iran in the wake of Tehran's postelection crackdown, or whether Biden had simply committed a gaffe. ...

Obama's comment was not the first time that administration officials have had to clarify Biden comments that varied from the official line. In April, White House officials struggled to explain that they were not recommending the public avoid airplanes and subways, even though Biden said that he would not want family members to use them because of the threat of swine flu.

Like I've been saying since last August, Biden is "kind of a bozo," which is fine in a Senator or blogger or whatever, but not so fine in a Vice President, especially when he's talking foreign policy, because foreigners might not realize he's just Old Joe Biden running off at the mouth again, but might take what he says seriously on the assumption that he's, like, you know, the Vice President of the United States of America. (As a commenter points out, Biden was brought on board specifically to impart foreign policy gravitas to the newcomer from the South Side of Chicago.)

Biden is just a veteran local hack politician -- he represented in Delaware less than half as many people as a Los Angeles County Supervisor represents, not one of whom is the second coming of George Kennan, either -- elevated to the Vice Presidency by the infallible wisdom of Obama.

But, who cares about the actual Vice President's performance? Now, back to wall-to-wall coverage of the former Vice Presidential candidate!

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

Barry Is Back

2009-07-07T15:18:00.009-07:00

Barry Ritholtz, television commentator and Big Picture blogger, replies in the Comments, continuing our discussion on whether or not "Diversity was a major factor in the mortgage meltdown:"

We live in very different worlds.

Mine is data and numbers and statistics and facts. In the investment world, by how well your theories of what is really going translates into an investable theme; you are judged by performance, not rhetoric.

Your world is all soft theory and suppositions and squishy reasoning and hard-to-prove causation. In my world, it would be described as "not actionable in the investment realm."

I am happy to visit, but the commute is a bitch.

Funny, though, but I've presented 95%+ plus of the "data and numbers and statistics and facts" in this discussion. Barry had only one set of numbers, and when I pointed out how they were too narrowly specified and were generally irrelevant, well, he had shot his wad in the data department and was forced first to make concessions, then to go back to this kind of bluster.

By the way, Barry, did your "investment world" do a really bang-up job of assessing the value of all those mortgages issued in, say, Riverside-San Bernardino in 2005? (Numbers that were readily downloadable from the federal Home Mortgage Disclosure Act database by October 2006, well before the crash?) Maybe, just maybe, your peers were missing a piece of the puzzle intellectually that would have enabled them to make sense of the numbers?

Barry, it's not your fault that you wrote a whole book about the Crash without thinking about the Diversity angle. Nobody thinks about the downsides of Diveristy. It's just not done in polite society You don't have to get your ego all tied up like this in trying to bluster your way out of admitting you made a mistake. Everybody made the same mistake as you.

The interesting legal question is whether it's against the law to use my insights in offering investment advice. It would almost certainly be disastrous for a mortgage lender to be caught in discovery of a discrimination lawsuit exchanging emails about the higher rates of defaults among Non-Asian Minorities. But is it illegal for an investment adviser to use ethnic demographics in, say, advising clients which states' bonds to avoid?

Certainly, the most sensible thing for an investment adviser like Barry to do would be to incorporate my ideas in his decision-making while loudly claiming in public to not believe them.

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

We're in Deep State

2009-07-07T02:20:00.004-07:00

Matt Taibbi has a Rolling Stone article on Goldman Sachs:

After the oil bubble collapsed last fall, there was no new bubble to keep things humming — this time, the money seems to be really gone, like worldwide-depression gone. So the financial safari has moved elsewhere, and the big game in the hunt has become the only remaining pool of dumb, unguarded capital left to feed upon: taxpayer money. Here, in the biggest bailout in history, is where Goldman Sachs really started to flex its muscle. ...

The collective message of all of this — the AIG bailout, the swift approval for its bank-holding conversion, the TARP funds — is that when it comes to Goldman Sachs, there isn't a free market at all. The government might let other players on the market die, but it simply will not allow Goldman to fail under any circumstances. Its edge in the market has suddenly become an open declaration of supreme privilege. "In the past it was an implicit advantage," says Simon Johnson, an economics professor at MIT and former official at the International Monetary Fund, who compares the bailout to the crony capitalism he has seen in Third World countries. "Now it's more of an explicit advantage." ...
Fast-forward to today. It's early June in Washington, D.C. Barack Obama, a popular young politician whose leading private campaign donor was an investment bank called Goldman Sachs — its employees paid some $981,000 to his campaign — sits in the White House. Having seamlessly navigated the political minefield of the bailout era, Goldman is once again back to its old business, scouting out loopholes in a new government-created market with the aid of a new set of alumni occupying key government jobs.

Gone are Hank Paulson and Neel Kashkari; in their place are Treasury chief of staff Mark Patterson and CFTC chief Gary Gensler, both former Goldmanites. (Gensler was the firm's co-head of finance.) And instead of credit derivatives or oil futures or mortgage-backed CDOs, the new game in town, the next bubble, is in carbon credits — a booming trillion- dollar market that barely even exists yet, but will if the Democratic Party that it gave $4,452,585 to in the last election manages to push into existence a groundbreaking new commodities bubble, disguised as an "environmental plan," called cap-and-trade. The new carbon-credit market is a virtual repeat of the commodities-market casino that's been kind to Goldman, except it has one delicious new wrinkle: If the plan goes forward as expected, the rise in prices will be government-mandated. Goldman won't even have to rig the game. It will be rigged in advance.

Meanwhile, Barry Ritholtz has a scanned copy of Michael Lewis's Vanity Fair article on AIG's Financial Products division, The Man who Crashed the World. (By the way, Barry, we haven't heard from you lately and we miss you around here. C'mon back)

Lewis makes Joe Cassano sound like the pointy-haired boss on Dilbert.

The basic story is one of predatory securitizing. It took Cassano over a year to realize that the mortgage-backed securities he was insuring had shifted in composition between 2003 and 2005 from only slightly subprime to heavily subprime.

[AIG executive Gene Park] suspected Joe Cassano didn't understand what he had done, but even so Park was shocked by the magnitude of the misunderstanding: these piles of consumer loans were now 95 percent U.S. subprime mortgages. Park then conducted a little survey, asking the people around A.I.G. F.P. most directly involved in insuring them how much subprime was in them. He asked Gary Gorton, a Yale professor who had helped build the model Cassano used to price the credit-default swaps. Gorton guessed that the piles were no more than 10 percent subprime. he asked a risk analyst in London, who guessed 20 percent. ...

Still, Cassano agreed to meet with all the big Wall Street firms and discuss the logic of their deals ... Cassano set out on a series of meetings with Morgan Stanley, Goldman Sachs, and the rest -- all of whom argued unlikely it was for housing prices to fall all at once [across the country.] "They all said the same thing" ... (The lone exception, he said, was Goldman Sachs. ... who said: Between you and me, you're right. These things are going to blow up.) The A.I.G. F.P. executives present were shocked by how little actual thought or analysis seemed to underpin the subprime-mortgage machine: it was simply a bet that U.S. home prices would never fall.

But how did this logic about the reliability of MBSs ever make sense even in the abstract? As it turned out, housing prices didn't go down in large parts of the country, at least not until after the Crash. Before that, they only fell in parts of the country where they had gone up the most, i.e., California. (Also, Greater Detroit, but who cares if a house drops from $65k to $12k? It never amounted to much in the first place.) But California by itself was enough, due to high home prices, to crash the national economy. Add in Florida, Arizona, and Nevada, and there goes the world. So, who cares if home prices are stable in Dallas and Charlotte if they are plummeting in San Bernardino, Las Vegas, Phoenix, and Miami?

Greed is the whole point of Wall Street, but the big question is: Where was Fear? The Greed was based on the increasing Quantity of the population, which should drive up demand for homes, but Fear over the Quality of the population of new home buyers was simply not part of the mental universe of sophisticates.

It still isn't.

Cassano finally admitted this was nuts in 2006, but he didn't try to get out of previous bets on subprimes, he just stopped taking new ones. But, after AIG got out of the game, the investment banks turned out to be willing to hold subprime MBSs unhedged:

The big Wall Street firms solved the problem by taking the risk themselves. The hundreds of billions of dollars in subprime losses suffered by Merrill Lynch, Morgan Stanley, Lehman Brothers, Bear Stearns, and the others were hundreds of billions in losses that might otherwise have been suffered by AIG F.P. Unwilling to take the risk of subprime mortgage bonds in 2004 and 2005 [or, less willing than AIG was], the Wall Street firms swallowed the risk in 2006 and 2007. ... A.I.G. F.P. wasn't an aberration; what happened at A.I.G. F.P. could have happened anywhere on Wall Street ... and did.

When the world finally woke up in the summer of 2007,

The subsequent race by big Wall street banks to obtain billions in collater from A.I.G. was an upmarket version of a run on the bank. Goldman Sachs was the first to the door, with shockingly low prices for subprime-mortgage bonds ... A.I.G. couldn't afford to pay Goldman off in March 2008, but that was O.K. The U.S. Treasury, led by the former head of Goldman Sachs, Hank Paulson, agreed to make good on A.I.G.'s gambling debts. One hundred cents on the dollar.

So, basically, the smart boys at Goldman knew it was nuts, but they figured that no matter who was in the White House, they'd have it all rigged that they would get bailed out. And the not-smart boys at the other Wall Street firms figured that if the smart boys at Goldman weren't worried, why should they be worried? (Other than that they weren't part of the Deep State like Goldman was ...)

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