February 7, 2009

Yet another NYT editorial denouncing "nativists!"

Here's the third (or maybe the fourth) editorial in the last week from the NY Times about the horrifying Nativist Menace:

'The Nativist Lobby'

The Southern Poverty Law Center on Tuesday released “The Nativist Lobby,” a report examining the connections among the three Washington-based organizations that have led the charge for restricting immigration to the United States.

They are the Federation for American Immigration Reform, the Center for Immigration Studies and Numbers USA — a lobbying group, think tank, and grassroots organizer, respectively.

All three groups are well known — you have probably come across their leaders denouncing immigration “amnesty” in news articles and on TV. The groups have the ear of conservative politicians all over the country, and their efforts have inspired many of the hard-line federal, state and local initiatives cracking down on immigrants and immigration. Numbers USA even took credit for a storm of blast faxes and phone calls to Congress that helped to kill a major immigration bill in 2007.

What is less well known, the report says, is what the groups have in common: histories connecting them to a retired Michigan eye doctor with a long-held interest in eugenics, racial quotas, and white nationalism.

The groups insist that they do not hold racist or extremist views. That’s good.

But the report argues that people should know about the groups’ history, something they and their allies don’t usually like to talk about. It calls them “fruit of the same poisonous tree.”

Many people who want stricter policies on immigration are not racist or extremist. Many care about seeing the law enforced, or are worried about overpopulation. But it’s also true that there are racist and extremist elements in the movement, and it is important to call them out.

Kudos to the S.P.L.C. for shining a light.

So, now we know what the NYT's Two Minutes Hate of three editorials screeching about "nativists" was all about: it has been a marketing campaign for this new proclamation by the money machine that is the Southern Poverty Law Center ("Dedicated to Wiping Out the Last Vestiges of Poverty, Southern or Otherwise, in the Lifestyle of Direct Marketing Association Hall of Famer Morris Dees").

When denouncing the "ties" of immigration realist groups, shouldn't the New York Times Editorial Board at least mention its own ties to the SPLC? For example, Editorial Board member Adam Cohen's "Professional Profile" on Spoke.com reads:

"Before joining the Times editorial board in 2002, he was [among other things] ... a lawyer for the Southern Poverty Law Center in Montgomery, Ala."

Thanks to Nicholas Stix on VDARE.com for finding that. (Here are summaries of some of Cohen's essays. And here, Hans Bader says, "If Adam Cohen did not exist, the Onion would have to invent him...")

As the SPLC blog "Hatewatch" complacently commented when congratulating the NYT editorial board on its denunciation of Marcus Epstein (of all people) as a "white supremacist:"
We couldn’t have put it better ourselves.

Indeed.

It's also easy to see why the Editorial Board had to keep banging the gong, rather than have the News department at the NYT write up this latest SPLC press release about that terrifying "retired Michigan eye doctor:" it's not news. The SPLC has been flogging the same story about Dr. John Tanton since at least 2002.

Here is part of Tanton's March 11, 2002 reply to 18 bullying questions from the SPLC:

Here are several questions of my own:

  1. I would like some assurances from an analysis of your staffing patterns that you do not discriminate on the basis of race, religion, gender or national origin. Please supply a list of your staff and governing board complete with an analysis for these four pillars of non-discrimination, and correlated with salary level. In your opinion, to avoid the charge of discrimination, should the makeup of your staff mirror the city of Montgomery, the state of Alabama, the United States - or perhaps the world? What groups are over- or underrepresented?

  2. Please give me your reaction to the Harper's exposé (November 2000) on the SPLC, charging your colleagues with veniality and hypocrisy, among other items. What is the social justification for your absolutely enormous endowment? These monies were evidently obtained from donors under false pretenses of actually doing something about Southern Poverty. Granted, based on your IRS 990 report, the SPLC has rescued its governing board and top staff from poverty. What have you done for the average impoverished Southerner, whose plight you have appropriated into your organization's name?

  3. Finally: there is an old maxim that what we say about others tells more about ourselves that it does about others. In this connection, SPLC is given to accusing others of racism and hate crimes. Exactly how would you describe the emotion that motivates you? Is it Love for those who are different or who you perhaps perceive as "enemies?" Or is it more akin to Hate on your part? My analysis is that it comes much closer to the latter than the former. Certainly SPLC is chief among the hate-mongering groups in the United States, if not the world.

John H. Tanton

That's just a bit of it. It's a great read.

And here's a summary of a Pulitzer-finalist investigative report into the abyss of abuse that is the SPLC.

By the way, a commenter recently offered an intriguing explanation for the otherwise baffling presence of the word "Poverty" in the name of the Southern Poverty Law Center: it's there to make the acronym "SPLC" almost indistinguishable from "SCLC," the famous acronym of the Southern Christian Leadership Conference that was once headed by Martin Luther King Jr. If true, then Morris Dees, a master direct marketer, has been more or less practicing mail fraud on elderly, easily confused donors for decades.

Finally, we can see once again how much good it's done FAIR, CIS, and NumbersUSA to try to be as respectable as all get out on immigration and never talk about race: you still get denounced as white supremacist hate groups by the New York Times!

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

Daniel Seligman, RIP

Dan Seligman, my role model as a quantitative journalist, has died at 84. Dan was the Bill James of public policy journalism.

I can recall sitting up all night in 1981, when I was supposed to be writing an MBA term paper at UCLA, with a shelf full of bound volumes of Fortune, reading years worth of his Keeping Up column.

The first time I ever spoke about becoming a professional journalist was 15 or 20 years ago when I mentioned to my wife that if Seligman ever retired from writing his "Keeping Up" column for Fortune, I'd make a good replacement.

Dan was the one of the first people I invited to join my Human Biodiversity email list ten years ago, and I was proud when he became a regular participant.

From the NYT:

Daniel Seligman, Longtime Fortune Columnist, Dies at 84
By DENNIS HEVISI

Daniel Seligman, who with gentle wit, ornate syntax, statistical acumen and a decidedly conservative bent engaged readers of his “Keeping Up” column in Fortune magazine for more than two decades, died Jan. 31 in Manhattan, where he lived. He was 84.

The cause was multiple myeloma, his daughter, Nora Favorov, said.

Mr. Seligman, who later wrote for Forbes magazine and other publications, was an editor and writer at Fortune from 1950 to 1997 and wrote more than 400 “Keeping Up” columns in his last 21 years at the magazine. Among the array of subjects Mr. Seligman poked fun at were political correctness, affirmative action, overbearing bureaucrats and what he considered loony leftists.

He also disputed those who doubted the value of I.Q. tests, a topic he fully examined in his 1992 book, “A Question of Intelligence: The I.Q. Debate in America.”

Many of Mr. Seligman’s opinions were grounded in his own application of mathematics, and while he was an ardent anti-communist in his early years, he sometimes used statistics to criticize the right, as well. In a 1992 column he tweaked a fictitious Conservative member of the British Parliament who wondered why so many of his colleagues had been ensnared in sex scandals.

“Imagine,” Mr. Seligman wrote, “a jar filled with 600 marbles, 331 of them blue and 269 red (these being, respectively, the numbers of Conservative and Labor MPs last fall, before the wave of scandals broke).”

“An observer wearing a blindfold — this would be the media,” he continued, “reaches into the jar and pulls out six marbles. What is the probability that all six will be blue? The answer is 2.76 percent, meaning there is only one chance in 36 of the Tory monopoly on parliamentary sex scandals being attributable to chance.”

Statistical analysis laced Mr. Seligman’s writings about genetics, the link between mortality and socioeconomic status, the efficacy of using horse-race betting as a means of money laundering, and whether there is correlation between the income of lawyers and their physical attractiveness.

For 12 years, starting in 1966, Mr. Seligman held several high-level editing positions at Fortune. In 1988, he stepped down as associate managing editor, but continued to write “Keeping Up.”

Marshall Loeb, the managing editor at the time, wrote in the magazine that Mr. Seligman “uses elegance and trenchant wit to wage his never-ending battle against fustian thinking.”

Born in Manhattan on Sept. 25, 1924, Mr. Seligman was a son of Irving and Clare O’Brien Seligman. In addition to his daughter, he is survived by his wife, the former Meg Sherburn; his son, William; his brother, Paul; his sister, Susan Cohn; and four grandchildren.

After serving in the Army in World War II, Mr. Seligman earned his bachelor’s degree from New York University. He wrote for The American Mercury, Commonweal and The New Leader before joining Fortune.

After leaving Fortune, Mr. Seligman became a contributor to Forbes magazine. Sometimes, based on his assessment of their statistical inaccuracies, he spoofed fellow journalists.

“After many years of observing media colleagues at work,” he wrote in 2002, “I would say most of them were standing behind the door when quantitative skills were handed out. They quote T. S. Eliot but are babes in the woods when it comes to correlations or the basic laws of probability. Even when the math is simple, they get bollixed up.”

In the early 1990s, when I got a Nexis account at work, I downloaded years worth of his columns. I thought I had had to delete them all at some point in the 1990s when my 300 meg hard disk ran out of room, but I just found a hidden-away copy on my hard drive. I will dig some up over the next week to show how much of my work is just an updating of what Dan was doing in the 1970s and 1980s.

Here's Peter Brimelow's 1993 interview with him. And here's Charles Murray's 1992 review of Dan's IQ book, A Question of Intelligence, in Commentary.

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

"Frost/Nixon"

Here's the beginning of my review of the Best Picture nominee from The American Conservative:

One of the oddities of the movie business is how films for grown-ups, such as “Frost/Nixon,” are now held hostage by that rather adolescent competition, the Academy Awards.

If “Frost/Nixon,” Ron Howard’s adroit rendering of Peter Morgan’s intelligent stage play about English TV personality David Frost’s 1977 interviews with deposed President Richard Nixon, had come out in April or August, it would have served as a refreshing break from the dreary fare of those off-months. Released at the end of the year to impress Oscar voters, however—along with seemingly the all the other non-superhero movies of 2008—“Frost/Nixon” has gotten lost in the box office crush, even after snagging Oscar nominations in five major categories (Best Picture, Directing, Acting, Editing, and Adapted Screenplay). Having spent the summer listening to my sons debate Iron Man versus Batman, the Oscar race leaves me perturbed that I’m now wondering whether Frank Langella’s Nixon could beat up Mickey Rourke’s Wrestler.

Unsurprisingly, Morgan’s persistent metaphor of the interviews as a boxing match between an untested lightweight and a battered ex-heavyweight champ doesn’t quite stand up to the scrutiny that a Best Picture winner should withstand.

Nonetheless, the glass is more than half-full. Ron Howard (“Apollo 13” and “A Beautiful Mind”) is a famous director because he was a child star, but he’s less an auteur with a distinctive style than a versatile craftsman in the tradition of all those highly effective but now easily confused golden age directors such as William Wyler and William Wellman.

I go on to explain what's wrong with the movie, but for that you've got to get the magazine. (Subscribe here.)

One additional point worth mentioning is that Peter Morgan's somewhat contrived drama relies upon the contemporary audience's presumption that talk show hosts are lowbrows who are completely ignorant about anything other than celebrity culture. But that wasn't the assumption a generation ago. Big time talk show hosts back then were supposed to be middlebrows with a lively range of interests. (The pure entertainment industry talk show hosts like Merv Griffin and Mike Douglas were a tier below the top guys in prestige.)

Steve Allen, the first Tonight Show host, was a wit, a musician, and a rather earnest intellectual who wrote a shelf-full of books. Jack Paar's Tonight Shows were more like the Charlie Rose Show than today's Tonight. Carson's early 1970s competitors, Frost and Dick Cavett, were metropolitan raconteurs tied into the world of ideas in London and New York, respectively. They weren't deep thinkers, but they knew the deep thinkers. Carson was perhaps closer to the pure show biz model triumphant today, especially after his move from NYC to LA, but he had his outside interests, such as astronomy and population control, thus making the scientists Carl Sagan and Paul Ehrlich into huge celebrities.

It often wasn't hard to figure out where these guys fell on a sophisticated ideological scale. Steve Allen, for example, was clearly an anti-Communist liberal of the Arthur Schlesinger Jr. school, opposed to both Republicans and the 1960s New Left.

Today, though, celebrity culture reigns supreme on the big talk shows, and the old middlebrow aspects have largely vanished. I presume Jay Leno doesn't mind -- he's a fine fellow and a consumate professional, but his interests lie elsewhere -- but you've got to imagine a smart Harvard boy like Conan O'Brien sometimes regrets he wasn't born three or four decades earlier and could have the range of topics that a David Frost was allowed to pursue.

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

Unstimulated

One reason I'm a lousy blogger is because I get bored easily, and thus often fail to write about what everybody else is writing about at the moment. This week, everybody was blogging about Obama's stimulus bill, but I said all I have to say about it in previous months, which has migrated to the edges of conventional wisdom by now.

Conversely, I started talking about the Community Reinvestment Act's role in the mortgage meltdown in August 2007, but by the time John McCain picked that idea up in the fall of 2008, I had gotten bored with it because I couldn't figure out a solid answer to the response, "Who held a gun to the heads of these big bankers and made them make loans to deadbeats?" Now, I've finally figured out what really happened, but who wants to hear about it now?

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

NY Times readers share their fantasies about the Obamas

Here's an apparently serious column in the NYT by Judith Warner that's beyond the powers of Christian Lander, Tom Wolfe, Evelyn Waugh, or Jonathan Swift to satirize:

The other night I dreamt of Barack Obama. He was taking a shower right when I needed to get into the bathroom to shave my legs, and then he was being yelled at by my husband, Max, for smoking in the house. ...

The other day a friend of mine confided that in the weeks leading up to the election, the Obamas’ apparent joy as a couple had made her just miserable. Their marriage looked so much happier than hers. Their life seemed so perfect. “I was at a place where I was tempted daily to throttle my husband,” she said. “This coincided with Michelle saying the most beautiful things about Barack. Each time I heard her speak about him I got tears in my eyes — because I felt so far away from that kind of bliss in my own life and perhaps even more, because I was so moved by her expressions of devotion to him."...

I launched an e-mail inquiry. ...

Many women — not too surprisingly — were dreaming about sex with the president. ...

There was some daydreaming too, much of it a collective fantasy about the still-hot Obama marriage. “Barack and Michelle Obama look like they have sex. They look like they like having sex,” a Los Angeles woman wrote to me, summing up the comments of many. “Often. With each other. These days when the sexless marriage is such a big celebrity in America (and when first couples are icons of rigid propriety), that’s one interesting mental drama.” ...

There was a dream, sent from Minneapolis, about buying Barack the perfect sandwich, and a dream from Westport, Conn., about inviting Michelle and the girls over for lunch and a play date. ...

One woman wrote that when she couldn’t get to sleep at night, she “lay in bed and thought about the Obama girls in their rooms at the White House. I thought about Marian Robinson up on the third floor. And about Barack and Michelle, a couple who clearly have a ‘thing’ for each other, spooning together in bed. It helped me relax.”

I understood perfectly where these cozy dreams of easy familiarity came from. It was that sense so many people share of having a very immediate connection to Barack Obama, whether they’re black or biracial, or children of single parents or self-made strivers; or they’re lawyers or community organizers or Ivy League graduates or smokers or basketball players or Blackberry users or parents or married or Democrats. A lot of people share the fantasy that having the Obamas over for “dinner and a game of Scrabble,” as one daydreamer put it to me, is something that really could just about happen.

“This is the first president I’ve known who looks, talks and acts like a peer,” is how one Washington man explained it to me. “Notwithstanding his somewhat exotic life story, I feel like I understand what he’s like and where he’s coming from. And despite his incredible achievements, he still seems like a lot of people I know. If you stopped the clock in 2004, in fact, or maybe a couple of years earlier, he’d feel roughly like a peer in terms of accomplishments, too." ...

Sometimes this sense of close identification turns a bit dark. There’s a subcategory of people who feel that they really should have true intimacy with the Obamas. Because they went to school with them. Because they used to dream like them. Because, with one or two “different turns,” they maybe could have been them.

These are not the people made most happy by thinking about the Obamas.

“They do seem to have it all together — a great marriage, beautiful children, a modern day Norman Rockwell family,” said a divorced Harvard grad with children in a top D.C. private school. “Why them, not me?”

These are people for whom the Obamas are not just a beacon of hope, inspiration and “demigodlikeness,” as a New York lawyer put it, but also a kind of mirror. And the refracted image of self they see is not one they much admire.

“I keep thinking about how I squandered my education and youth,” the New York lawyer wrote to me. “I went off to college from high school being completely community-minded, doing a lot of volunteer work for the homeless and for hunger and tutoring poor kids. Then I got to college and forgot my ideals. Barack was my year at Columbia. Why wasn’t I hanging out with him and being serious and following my ideals instead of hanging out in clubs? Same with law school. I partied my way through instead of taking advantage of all that I could have. Both Obamas were there when I was. I feel like if I’d been a better person I would have gotten to know them.”

A Washington lawyer expressed similar sentiments: “I feel like I know Barack, that I have worked grassroots and have created change in the way that he has. I [also] have feelings of a mom who had possibility but ended up running school auctions and mediating family business matters rather than having the opportunity to be out there on a national level creating change. So when I watch Barack I feel like: I can do that … and what am I doing with my life? Even though he is way smarter and more articulate than me.”

Another Washington woman, a global health care consultant, expressed her sense of Obama-inadequacy in a dream: “I dreamed I was an Obama girl. I had a chance to be in the same room with him for the first time. There were dark velvet chairs and he was standing there with all this dark and mist around him. His lips so purple and sensuous as if to be otherworldly,” she wrote to me. “I moved gently toward him and then I said the wrong thing. Obama tamped it down like some vapor that didn’t register. He wasn’t even flattered.”

(“Like a lot of folks, I have anxiety about being outside of the Obama administration universe right now,” she then explained to me. “Even though I was at the ‘it’ ball of inauguration balls, I still felt like other balls were greener, or more purple, or with credentials completely out of my control — more young. I really feel like I’m scrambling internally … to deserve Obama cred and all I’ve got is this over-my-head wonder for the man that amounts to being an Obama girl.”)

For some, not knowing the Obamas has almost turned into a feeling of being snubbed or excluded. Like in middle school. It’s funny. Almost.

“Why won’t my kids be sleeping over at the White House? And as my daughter noted, why couldn’t she get to sit front and center and see the Jonas Brothers and Miley perform at the kids’ inaugural concert? If she went to Sidwell, then she might have these chances, she said …” wrote a mother whose kids are not at Sidwell Friends school with Sasha and Malia.

“Will Michelle stay down to earth? She could prove it by joining our book club,” wrote a Sidwell mom.

This is, perhaps, the price of faux-familiarity. If I were Barack Obama (or Michelle, for that matter), I’d be a little scared. After all, when people are wearing their egos on their sleeves, it’s so easy to bruise their feelings. What will happen if fantasy turns to contempt?

If I were in charge of the Secret Service, I'd be forwarding this column to all my agents with a note saying, "Stop worrying about Al Qaeda and the KKK, these are the people we really have to worry about going over the edge and shooting President Obama. New York Times subscribers are scary, scary folks."

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

February 6, 2009

Student loan default rates by ethnicity


One way to get a sense of what happened to mortgages, where the government doesn't track default rates by race, is to look at default rates for college loans. From a 2007 Education Sector article by Eric Dillon: "A Closer Look at Student Loan Default Rates:"
Black students who graduated in 1992–93 school year had an overall default rate that was over five times higher than white students and over nine times higher than Asian students. The differences for Hispanic students are not as large, but are still substantial. Hispanic students' overall default rate was over twice that of white students and four times higher than Asian students. And these differences cannot be fully explained by differences in borrowing patterns or salaries. The 1994 percentage of monthly income going to student loan payments—an indication of both how much debt a student has and their earnings—was actually lowest for Hispanic students and only slightly higher than average for black students. ...

The median monthly loan payment as a percentage of monthly income in 1994 for recent 1992–93 graduates was 6.7 percent for the United States as a whole, 7.4 percent for Asian students, 7.2 percent for black students, 5.3 percent for Hispanic students, and 6.8 percent for white students.

In other words, income didn't have much to do with default rates. (On the other hand, whites and Asians would be more likely to have relatives who could help them out repaying their loans during hard times. That's something that's overlooked in thinking about mortgages, as well.)
My published articles are archived at iSteve.com -- Steve Sailer

Slim Times at it again

Oh, no, a sheriff in Arizona is acting as if illegal immigration is, you know, illegal, laments the Slim Times.

He who pays the piper, calls the tune.

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

Bill Gates vs. Bill Gates

Bill Gates, who supposedly scored 1590 on the SAT (which is equivalent now that the maximum has been raised to 2400 and scoring made easier, to about, oh, roughly, a million today), is, notoriously, the World's Biggest IQ Snob in his personal business (at which he's been rather successful). And yet, the Gates Foundation, the chief meddler in American public schools, is as allergic to thinking about the impact of IQ variations on education as every other spouter of the Conventional Wisdom. Not surprisingly, the Gates Foundation has been rather unsuccessful at improving public schools, according to Bill Gates.

Gates's IQ elitism in his personal life is evident even in his writing for the Gates Foundation. Here are excerpts from the first page of his 2009 Annual Letter on the work of the Gates Foundation, where he discusses his transition from Microsoft to fulltime work at the Gates Foundation:

My job at Microsoft had three magical things. ... Finally, the work let me engage with people who were smart and knew things I didn’t....

I love the work at the foundation. Although there are many differences, it also has the three magical elements. ... Second, I feel like my experience in building teams of smart people with different skill sets focused on tough long-term problems can be a real contribution. ... However, I am equally confident that our maniacal focus on drawing in the best talent and measuring results will make a difference. Finally, I find the intelligence and dedication of the people involved in these issues to be just as impressive as what I have seen before. Whether they are scientists at a university or people who have worked in the field in Africa most of their lives, they have critical knowledge and want to help make the breakthroughs. The opportunity to gather smart, creative people into teams and give them resources and guidance as they tackle the challenges is very fulfilling. [Emphasis mine]

In contrast, as the boss of the Gates Foundation, Gates argues that everybody must complete a post-secondary degree or certification. Of course, Bill Gates, himself, is a Harvard dropout.

That Gates is a dropout is not a secret, but it's just the kind of fact that's not considered relevant in thinking about school policy.

Look, lecturing kids who are struggling to graduate from high school that getting a high school degree is useless except as preparation for getting a postsecondary degree is a catastrophic strategy. It's the old Yale or Jail syndrome, which encourages a lot of youths to believe that an honest life of reasonably compensated work is hopeless for them, so they might as well drop out of high school now and start dealing drugs.

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

Bill Gates ruined my daughter's high school

A reader writes:

This may run a little long since I have intimate experience with Bill Gates' program for small schools within schools.

In 200X or so, my daughter was attending XYZ High School in the VAPAC program (Visual and Performing Arts Center), a magnet school for the city that rivaled the best FAME programs in the country in terms of great teachers and motivated students.

VAPAC was a school within a school at XYZ High. It had about 500 kids among a greater student body of 2000. The program's classes were open to all the students for plays, choir, band, etc.

XYZ High was broken up at 25% white, 25% black (ghetto) 25% asian (Hmong, Vietnamese) and 25% Hispanic. The VAPAC program had a majority of whites who helped raise the test scores for the entire school.

Then The Bill and Melinda Gates Foundation raised their head. XYZ High was offered millions to transform into small learning communities where it would be broken up into groups of 500 kids or so who would matriculate together as helping and bonded communities since large schools were impersonal and made kids feel lost and adrift.

When this proposal was made to the parents of Vapac students, we protested. They were going to dissolve the small community that already was working and effective.

What came about was a lesson in racial politics. VAPAC had to be destroyed because it was too white (60% or so). The black (female) Principal and others complained that not enough black students were in the plays, musicals, choir, jazz dance, etc.

It was explained that everyone in the school was eligible to participate and win roles based on ability, but that wasn't good enough. So they set out to ruin the program.

The school district then transferred the school to the retired Phoenix Suns basketball player Kevin Johnson (now mayor), who promised to make his charter school a beacon of great test scores to send ghetto blacks to college. It hasn't happened of course. Vapac was destroyed (one of the best high school programs in the country and world), and XYZ High is now a school everyone but a few blacks avoid.

My daughter was able to graduate in the last year of VAPAC, fortunately for her.

Of course, my wife and I tried to tell others at the various "community" meetings that Gates' ideas were crackpot social engineering that wouldn't work either since improvement always depends more on discipline and parents' involvement than schemes and grant money.

We were looked on as racists, though.

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

Bad schooling ideas never die

After I reported yesterday that Bill Gates had given $1 million in 2001 to long-time Weatherman fugitive Rick Ayers (brother of President Obama's extremely distant acquaintance Bill Ayers) to start "small learning communities" within Berkeley High to, among other things, take students to Cuba to study "social justice," a reader who graduated from Berkeley High in the 1970s reported that the exact same idea had already been tried way back when the Ayers brothers were making bombs instead of agitating for "small schools."

And it failed then in the 1970s, too, just as Gates has discoverd his couple of billion bucks he spent promoting the Ayers Bros. hobbyhorse has failed in the 2000s. From Time Magazine, April 10, 1972:

Now a few public schools are trying to create some alternatives of their own within the system, using wings of existing buildings, storefronts and lofts to house small subschools, each with a different educational emphasis. The intent is to break up the impersonal mob scene that many schools have become, and to give students choices—even if it sometimes means letting them choose racial separation.

... But the trend has gone farthest in Berkeley, Calif., which now has 18 such schools at all levels and plans to add six more next fall. ... In 1968, Berkeley became the first city with more than 100,000 people to integrate its schools voluntarily by busing both whites and blacks (38% of the pupils ride to school). But Berkeley's integration brought demands from minority groups for more attention to their particular learning problems and more emphasis on their cultures. At the same time, many of Berkeley's middle-class white kids were in open rebellion against what they considered stultifying school rules and courses.

For both groups, "the melting pot never melted," says Larry Wells, coordinator of the alternative schools. Instead of trying to submerge diversity, Berkeley is now trying to encourage it, replacing the image of a melting pot with that of a mosaic....

Berkeley High is a six-block-square complex of buildings holding 3,000 students. For approximately 1,800 of them, the conventional curriculum of courses—and a rich fare of electives—is fine. But 1,200 students have chosen to enter the more cohesive atmosphere of one or another of the six alternative high schools that are housed within the big complex.

Community High, for example, is earnestly disorganized. There long-haired boys and girls help screen prospective teachers, call staff members by their first names, and get phys. ed. credit for karate. Both blacks and whites take courses in "Soul in Cinema" and transcendental meditation. ...

Most of the alternative high schools are kept integrated by aggressive recruiting and informal quotas (Community High, for example, has 65 Third World students and 120 whites, with a white waiting list of 75). The Agora School aims specifically at fostering an appreciation of racial differences and keeps its staff and student body exactly one-quarter each white, black, Chicano and Asian. But three other alternative schools that meet away from Berkeley High are less concerned about integration.

Blacks Only. The Marcus Garvey Institute, housed in a former factory, is devoted to "taking care of business," chiefly for black students, including some who are on the verge of dropping out. Graded, seminar-type classes offer "Black Economic Development," emphasize basic math and reading. Whites are welcome, the staff insists, but since blacks assumed control this fall, whites have dropped to 12 in the enrollment of 60. Going even farther, Black House accepts only blacks, and Casa de la Raza takes only Chicanos....

More than just race is at stake, for the issue touches upon the central problem in all the proposals for decentralizing the nation's large institutions. from auto plants to city governments. Self-determination easily becomes narrow parochialism. In Berkeley, principals of the conventional schools that accredit the small units worry that the alternative schools may become too haphazard to remain worthy of their diplomas. The small schools' volatile independence, on the other hand, is often precisely what makes them useful as escape valves....

Berkeley's original subschools began with modest grants from the Ford and Carnegie foundations; the system now has a 21-year, $3.5 million grant from a new federal experimental schools program that provides $200 extra for each child in a subschool—on top of an average per-pupil expenditure of $1,675, one of the highest in the nation.

My reader writes on what happened later in the decade:

In the fall of 1975, there was a crippling teachers' strike, the grant money had run out and the sub-schools were crumbling. We all had a private laugh at the black separatists suddenly having to change their rhetoric and actually seek common ground with the rest of the school to try and keep their fiefdom going. Only one or two of the sub-schools survived, informally, and those were for white overachievers.

Then, Rick Ayers revived the failed small (radical indoctrination) schools within Berkeley H.S. idea around the beginning of the decade and got a half million from the feds and a million from the Gates Foundation. Academic failure ensued once again, and just before the Gates Foundation grant ran out in 2007, Ayers quit and enrolled in the Ph.D. in Education program at UC Berkeley so he can train teachers rather than students, propagandizing wholesale rather than retail.

This is an example of a general rule: Although the K-12 education industry is obsessed with promoting "new methodologies" (i.e., panacea-of-the-month), there aren't any. Schooling is an old, old business, and just about everything has been tried before, and proven not to be the miracle breakthrough that was hoped for. But memories are short, and a sucker is born everyday, with Bill Gates being merely the richest sucker, so why give them an even break?

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

Note to overseas readers: millions, billions, trillions

A German reader has pointed out that my recent work on Community Reinvestment Act pledges of boggling scale by American financial firms is confusing to Continental readers more familiar with the "long scale"" of naming huge numbers (where a "billion" is what Americans call a "trillion") rather than the American "short scale." So, let me recount some ten year pledges to serve minority and low income "communities" with both the American words and the dollar numbers:

WaMu -- $375 billion -- $375,000,000,000.00
Bank of America -- 1.5 trillion -- $1,500,000,000,000.00
Countrywide -- 600 billion -- $600,000,000,000.00

My apologies.

In fact, from now on, I think I'll write out the numbers in words as if on a check.
We, Bank of America, promise to pay to CRA-covered recipients One Trillion, Five Hundred Billion, No Million, No Thousands, No Dollars, and 00/100 Cents.

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

The New York Times attacks VDARE.com again

Apparently, the New York Times Editorial Board was surprised to receive a lot of email laughing at their editorial last weekend that furiously denounced Marcus Epstein as a "white supremacist" for calling for moderation.

So, now the NYT is denouncing VDARE.com again. Peter Brimelow responds here, Marcus Epstein here, and Patrick Cleburne here.

Pat Buchanan responds here.

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

Octomom and Oliver Wendell Holmes

From the LA Times on the octuplets mother:
In 1999, she was injured during a riot at Metropolitan State Hospital in Norwalk when she was hit in the back with a desk. She went on temporary disability and was paid nearly $170,000 in disability benefits between 2000 and 2008 for injuries to her back, neck and shoulder, the records show.

What kind of hospital has a riot? Oh, that kind ...

The LA Times doesn't explain, but Metropolitan State Hospital in Norwalk, founded in 1915, is an old-fashioned 162 acre sanitarium for mental patients.

So, Octomom was locked up for being crazy back in 1999 before she had any of her 14 kids.

UPDATE: Readers point out she was more likely employed at the loony bin in 1999 as a psychiatric technician than detained there. Are mental health employees more likely to go round the bend? Are mental diseases infectious? Paging Dr. Cochran!

Is there a policy issue here or are we just dealing with anomalous insanity? Perhaps. I think we're seeing an extreme case of the reaction to pre-War eugenics in action here.

Supreme Court justice Oliver Wendell Holmes Jr. has been relentlessly castigated for decades for opining in the 1927 case Bell v. Buck upholding a forced sterilization that "Three generations of morons were enough." That was a classic Progressive-era busybody view.

In reaction, we've moved very far in the opposite direction. A couple I once knew wanted to have their extremely retarded daughter (non-speaking, non-toilet trained) sterilized so she wouldn't get pregnant if some predator thought that the perfect rape victim would be a woman who couldn't testify in court. The state wouldn't allow it because the ACLU had sued over it.

Octomom appears quite capable of doing it again -- she's only 33 -- but I haven't heard any "respectable" calls for sterilizing her against her will (although plenty of ordinary citizens have called for it in Internet comment sections). It would be just so eugenicy, so Oliver Wendell Holmesy for anybody to even think of doing such a thing.

It's an extreme case, and I don't have an opinion on what the law should be, but it does provide a measure of the zeitgeist.

(For my opinions on eugenics, see here and here.

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

February 5, 2009

Bill Gates admits he's blown $2 billion on Ayers Brothers small schools boondoggle

Bill Gates's 2009 annual letter on what the Gates Foundation is up to says:

Nine years ago, the foundation decided to invest in helping to create better high schools, and we have made over $2 billion in grants. The goal was to give schools extra money for a period of time to make changes in the way they were organized (including reducing their size), in how the teachers worked, and in the curriculum. The hope was that after a few years they would operate at the same cost per student as before, but they would have become much more effective.

I don't know the full history of the "small learning communities" fad, but one important proponent was Bill Ayers, the unrepentant terrorist and extremely distant acquaintance of President Obama, who set up the Small Schools Workshop in Chicago in 1991 with his sidekick, Mike Klonsky.

Ayers, with others, then put together a proposal that got $50 million (plus matching contributions) for the Chicago Annenberg Challenge out of Old Man Annenberg, a famous GOP donor. Barack Obama was recruited in 1995 to become Chairman of the Board of Ayers's baby, which gave handouts to "community organizations" to help them relate to the Chicago public schools. Years later, a quantitative study found that the Obama-Ayers plan had done nothing for test scores (but it had done a lot for the Obama brand name among the activists who got the moolah).

Indeed, Ayers' Small Schools Workshop and Obama's Chicago Annenberg Challenge had the same mailing address from 1995 to 1999: 115 S. Sangamon St., Third Floor. Whether Ayers's Small Schools Workshop and Obama's Chicago Annenberg Challenger operated out of the same office or whether they had separate offices across the hall from each other is unknown. Obama's outfit gave over $1 million dollars to Ayer's outfit, which presumably made things matey on the elevator each day.

What's the relationship between Bill Ayers and the Gates Foundation? The first Google entry I came up with was a 2001 article entitled "Can 'Small Schools' Save Berkeley High?' In it, a school administrator named Rick Ayers was quoted as saying:

"In the transition, we're gonna have a half-million dollars from the feds and close to a million from the [Bill and Melinda] Gates Foundation--that's what we're asking for," Ayers says. "But a million and a half isn't a hell of a lot of money , and you don't want to prop up a program on just that. But that money will put teachers into a position to lead these changes. We have to demonstrate that we can do the Small Learning Communities with the budget that we have. It isn't just small schools; I wish it were."

I said to myself, "I betcha Rick Ayers is Bill Ayers's brother."

Sure enough. Rick spent seven years on the lam from his days in the Weather Underground with his brother Bill and Bill's wife fork-loving wife Bernardine Dohrn before serving ten days in jail. (Here's a downright amorous 2001 profile of Rick Ayers and his small schools plan in the San Francisco Chronicle.)

It's not totally clear whether Rick got in on the small schools racket from his brother's example or vice-versa, but I would guess that Bill is the dominant personality among the Ayers siblings.

Rick Ayers long headed the small learning community within Berkeley called Community Arts & Sciences (CAS). The Berkely Daily Planet reports:

CAS students take on internships at hospitals, schools and other community institutions. They have traveled to foreign countries like Cuba and Mexico to learn about social justice. They participate in media literacy projects: the Berkeley High School Slang Dictionary, a class project where students contribute to an index of contemporary teen argot, is the most prominent example.

But the small schools experiment has not reached the heights Ayers hoped it would. Ayers and other small schools advocates are convinced the advantages of small schools can only be fully realized if all of Berkeley High is divided into small communities—which isn’t expected to happen anytime soon.

The Revolution has not failed. The Revolution has been betrayed. Only complete conquest by the Revolution will reveal the benefits of the Revolution.

The Gates Foundation grant of $1,000,000 to implement Rick Ayers's plan to create four small schools within Berkeley High ran out in 2007. Apparently, it was not renewed. Math test scores in Rick Ayers' CAS hit disastrously low levels by 2007.

What about Bill Ayers and Bill Gates?

I've found Bill's Sancho Panza, Mike Klonsky, boasting/complaining that the Small Schools Workshop brought the Gates Foundation to both Chicago and Baltimore, along with a lot of kvetching about the Gates Foundation that makes it sound like Bill Gates never quite pulled the trigger and wrote a check to Bill Ayers (unlike the megabuck he gave to Rick Ayers).

Back to Bill Gates's 2009 Annual Letter:

Many of the small schools that we invested in did not improve students’ achievement in any significant way. These tended to be the schools that did not take radical steps to change the culture, such as allowing the principal to pick the team of teachers or change the curriculum. We had less success trying to change an existing school than helping to create a new school.

Even so, many schools had higher attendance and graduation rates than their peers. While we were pleased with these improvements, we are trying to raise college-ready graduation rates, and in most cases, we fell short.

So, basically, Bill Gates has finally found out that Bill Ayers's big idea doesn't actually make kids smarter. (This is not to say that big schools are better than small schools, however. School size is just not all that important an influence, and Gates was deluding himself when he seized upon it as a magic bullet.) Perhaps it has now dawned upon the Microsoft zillionaire that Bill Ayers advocated "small learning communities" as a political tool. (Among other advantages, it gives radical teachers more time to indoctrinate a core cadre of their students in leftism.)

And, you know, it seems to have worked pretty well at politics, helping launch Ayers' extremely distant acquaintance Barack Obama's career all the way from the third floor of 115 S. Sangamon to the White House.

The funny thing is that the Ayers Brothers' "small school" fad had already failed at Berkeley H.S. in the 1970s. A reader who was there in the mid-1970s alerted me to this old Time Magazine article, April 10, 1972:

Now a few public schools are trying to create some alternatives of their own within the system, using wings of existing buildings, storefronts and lofts to house small subschools, each with a different educational emphasis. The intent is to break up the impersonal mob scene that many schools have become, and to give students choices—even if it sometimes means letting them choose racial separation.

... But the trend has gone farthest in Berkeley, Calif., which now has 18 such schools at all levels and plans to add six more next fall. ... In 1968, Berkeley became the first city with more than 100,000 people to integrate its schools voluntarily by busing both whites and blacks (38% of the pupils ride to school). But Berkeley's integration brought demands from minority groups for more attention to their particular learning problems and more emphasis on their cultures. At the same time, many of Berkeley's middle-class white kids were in open rebellion against what they considered stultifying school rules and courses.

For both groups, "the melting pot never melted," says Larry Wells, coordinator of the alternative schools. Instead of trying to submerge diversity, Berkeley is now trying to encourage it, replacing the image of a melting pot with that of a mosaic....

Berkeley High is a six-block-square complex of buildings holding 3,000 students. For approximately 1,800 of them, the conventional curriculum of courses—and a rich fare of electives—is fine. But 1,200 students have chosen to enter the more cohesive atmosphere of one or another of the six alternative high schools that are housed within the big complex.

Community High, for example, is earnestly disorganized. There long-haired boys and girls help screen prospective teachers, call staff members by their first names, and get phys. ed. credit for karate. Both blacks and whites take courses in "Soul in Cinema" and transcendental meditation. ...

Most of the alternative high schools are kept integrated by aggressive recruiting and informal quotas (Community High, for example, has 65 Third World students and 120 whites, with a white waiting list of 75). The Agora School aims specifically at fostering an appreciation of racial differences and keeps its staff and student body exactly one-quarter each white, black, Chicano and Asian. But three other alternative schools that meet away from Berkeley High are less concerned about integration.

Blacks Only. The Marcus Garvey Institute, housed in a former factory, is devoted to "taking care of business," chiefly for black students, including some who are on the verge of dropping out. Graded, seminar-type classes offer "Black Economic Development," emphasize basic math and reading. Whites are welcome, the staff insists, but since blacks assumed control this fall, whites have dropped to 12 in the enrollment of 60. Going even farther, Black House accepts only blacks, and Casa de la Raza takes only Chicanos....

More than just race is at stake, for the issue touches upon the central problem in all the proposals for decentralizing the nation's large institutions. from auto plants to city governments. Self-determination easily becomes narrow parochialism. In Berkeley, principals of the conventional schools that accredit the small units worry that the alternative schools may become too haphazard to remain worthy of their diplomas. The small schools' volatile independence, on the other hand, is often precisely what makes them useful as escape valves....

Berkeley's original subschools began with modest grants from the Ford and Carnegie foundations; the system now has a 21-year, $3.5 million grant from a new federal experimental schools program that provides $200 extra for each child in a subschool—on top of an average per-pupil expenditure of $1,675, one of the highest in the nation.

My reader writes on what happened later in the decade:

In the fall of 1975, there was a crippling teachers' strike, the grant money had run out and the sub-schools were crumbling. We all had a private laugh at the black separatists suddenly having to change their rhetoric and actually seek common ground with the rest of the school to try and keep their fiefdom going. Only one or two of the sub-schools survived, informally, and those were for white overachievers.

Then, Rick Ayers revived the failed small (radical indoctrination) schools within Berkeley H.S. idea around the beginning of the decade and got a half million from the feds and a million from the Gates Foundation. Academic failure ensued once again, and just before the Gates Foundation grant ran out in 2007, Ayers quit and enrolled in the Ph.D. in Education program at UC Berkeley so he can train teachers rather than students, propagandizing wholesale rather than retail.

This is an example of a general rule: Although the K-12 education industry is obsessed with promoting "new methodologies" (i.e., panacea-of-the-month), there aren't any. Schooling is an old, old business, and just about everything has been tried before, and proven not to be the miracle breakthrough that was hoped for. But memories are short, and a sucker is born everyday, with Bill Gates being merely the richest sucker, so why give them an even break?

I wrote in VDARE.com last summer that educators need to stop falling for this year's Solution of the Century every year.

A huge amount of time is wasted reorganizing schools and retraining teachers for the latest fad, which, typically, was tried and discarded so long ago that nobody can remember anymore. (So don't take these ideas I'm tossing out all that seriously!)

Many teachers and administrators don't mind all the reorganizations because sitting around playing office politics versus each other is more fun than trying to get students to memorize the Times Tables.

The dogma of racial equality helps explain much of the educartel's susceptibility to the latest cult craze. Nobody has ever been able to get blacks and Hispanics to consistently perform as well as Asians and whites on a large scale. And, since the obvious implication of this reality is unthinkable (in many minds, quite literally), then it must be the schools' fault. What else could it be?

This logic is then used by reformers to justify implementing their pet obsessions. If the schools are small, for instance, that could be the reason for the racial gap. So, make them bigger. If they are big, then make them smaller. Just do something!

For example, the insanely rich Gates Foundation has been pressuring public schools to deconstruct themselves into "small learning communities"—which was what Americans were trying to get away from back when they built big learning communities.

One way to gain a wiser perspective on K-12 fads is to think about how you chose which college to attend. For some reason, ideology tends to get in the way less in individuals’ college choices than in debates about public school policy.

Did you pick a small college or a big college?

And did you make the right choice?

You may have a strong opinion on the subject of the optimal college size. But, whatever it is, you have to admit that other people disagree with you. After all, both Caltech (864 undergraduates) and University of Texas at Austin (36,878 undergraduates) seem to have done pretty well for themselves over the years. Different sizes come with objective advantages and disadvantages. For example, when I attended huge UCLA, there were professors on campus expert on practically every topic under the sun, but my parking lot was a half-hour walk away. Moreover, different people flourish best in different size schools.

Education fads are seldom motivated by statistical research, since it's hard to move the needle noticeably for a large number of schools. As we've known since the Coleman Report during LBJ's Great Society, the students are more important than the school.

Instead, education vogues are launched by statistical outliers.

Small schools are particularly likely to be outliers, because they are small. There are so many of them, and unusual things can happen more easily when fewer people are involved.

These flukes aren't necessarily false results. When the right principal, right teachers, and, especially, right students come together, good things can happen.

Not surprisingly, though, outliers are hard to replicate on a large scale.

Lots of new educational fads are launched by charismatic individuals who can personally make them work. Charisma can accomplish amazing things. Rasputin apparently could stop the Crown Prince of All the Russias' internal bleeding just by talking to him. Nevertheless, "Hire lots of Rasputins!" is not a reliable strategic plan for hemophilia clinics.

Similarly, there are millions of schoolteachers in America. As the law of large numbers would suggest, most of them are not charismatic superstars like the ones they make inspirational movies about.

Not surprisingly, Bill Gates is now calling for more teachers to be charismatic superstars like the ones they make inspirational movies about:

It is amazing how big a difference a great teacher makes versus an ineffective one. Research shows that there is only half as much variation in student achievement between schools as there is among classrooms in the same school. If you want your child to get the best education possible, it is actually more important to get him assigned to a great teacher than to a great school.

Whenever I talk to teachers, it is clear that they want to be great, but they need better tools so they can measure their progress and keep improving. So our new strategy focuses on learning why some teachers are so much more effective than others and how best practices can be spread throughout the education system so that the average quality goes up. We will work with some of the best teachers to put their lectures online as a model for other teachers and as a resource for students.

Yeah, I'm sure that will do the trick.

Look, it's hard to be a good teacher throughout your whole career. It's not all that hard for a new charter school to find teachers who are experienced enough to know what they are doing but not so experienced they are worn out. It's especially hard to keep caring so much about other people's children after you have children of your own. Lots of school systems down through the ages -- e.g., Eton and Harrow, Oxford and Cambridge, 1950s Catholic parochial schools, and Jesuit high schools -- have had a solution for that particular problem of teachers running out of energy for dealing with other folks' kids after they have had kids of their own: celibacy.

Somehow, I don't think that's going to work in the public schools.

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

A free market distinction: commerce vs. finance

Free market ideology needs to grasp the distinction between commerce and finance. The basic libertarian ideology revolves around the government only preventing "acts of force or fraud." So, we don't need a whole Indian-style Permit Raj to tell Procter & Gamble whether or not they can bring out a new flavor of Crest. If the new flavor of Crest poisons people, well, they can sue P&G and win hefty settlements, and P&G knows that, so P&G doesn't poison all that many people.

On the other hand, in the financial sphere, there's a huge gray area over whether something will turn out to be fraud or not.

I take my money and deposit it in the bank, which tells me that I can take it out anytime I want. And then the bank decides that rather than lend my money to Procter & Gamble at X% interest to build a new toothpaste factory, it would be a great idea to buy a mortgage-backed security consisting of the lowest tranche of the second mortgages (i.e., the mortgages that enable the first mortgages to be, net zero money down) on a bunch of loans to roofers in Compton that they bought from Countrywide because it pays 2X% and, besides, they need the CRA credits to get regulatory approval to buy another bank.

So, one day I go to take my money out of the bank and there's a big line of angry depositors banging on the locked doors, and then a man comes out to say the FDIC has taken over the bank and you'll all get your money back (assuming you didn't put too much in the bank). So, I've got that going for me in my role as a depositor, but that's not so great in my role as a taxpayer.

Therefore, it's clear that libertarians should not be seduced by free market ideology when it comes to finance. It's a different beast than cash-on-the-barrelhead commerce. Fraud, including unwitting fraud, is always a big risk in finance.

On the other hand, non-libertarians shouldn't expect the government to do a good job of regulating the finance industry. Take a look at what blew up the world. Bill Clinton, George W. Bush, and Barack Obama all strongly wanted your bank to make zero money down loans to those roofers in Compton.

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

Mortgage expenses by race

Parapundit points me toward this AP article: "Financial burden of homeownership spread unequally" by Alan Zibel that provides a lot of good statistics, but, of course, fails to tabulate the foreclosure rate by ethnicity. Still, it's worth reading:

WASHINGTON (AP) — ... Inequality in America has traditionally followed familiar patterns of race, age and education. Those long-standing gaps have been magnified by the real estate boom and now the historic bust, according to an Associated Press analysis of 2007 Census Bureau data.

While minorities have made significant gains in wealth and home ownership since 1990, "things are going into reverse gear," and now the homeownership rate for blacks and Hispanics is falling, said Edward Wolff, a New York University economist who studies income and wealth distribution.

Nearly 9.5 million households, or nearly one out of every five of the nearly 52 million homeowners with a mortgage, spend 38 percent or more of their pretax income on their mortgage payment, property taxes and insurance, the AP's analysis found.

The traditional standard was don't go over 30% of your income, so 38% is a high standard.

Now this is only looking at homeowners with a mortgage, so it ignores every homeowner who has paid off his mortgage (a group, I would imagine, that is overwhelmingly white).

That's the new threshold to qualify for the loan assistance program launched last month by Fannie Mae and Freddie Mac, the mortgage finance companies now under government control.

Not surprisingly, the most financially burdened are in California, Florida, Nevada and the Northeast, areas hardest hit by soaring home prices and now foreclosures. ...

The AP's analysis reveals the enormous scope of the U.S. housing market bust and how unevenly the burdens are spread, both geographically and demographically. ... The burden is clearly more arduous among minority households, the AP analysis found.

Just under a third of Hispanic homeowners spend at least 38 percent of their income on housing expenses, compared with about a quarter of Asian and black households and nearly 16 percent of white households.

In much of the country, the trend is more pronounced. For example, included among those who spent at least 38 percent of their income on housing are:

About 40 percent of black borrowers in California, Nevada, Oregon and Massachusetts.

More than 30 percent of Asian borrowers in California and Florida.

Nearly half of Hispanic homeowners in Rhode Island and at least 40 percent in Alaska, California, Florida, Hawaii, Maryland, New Jersey and New York.

Many Latino families wound up with expensive subprime mortgages because they often have cash income and no bank account, said Janis Bowdler, associate director for wealth building at National Council of La Raza in Washington.

It is common for Latino families to have stable incomes

Well, at least until they stopped having stable incomes when the Housing Bubble Economy stopped. The circularity of the Hispanic Housing Bubble is still not well understood.

but limited credit histories — and hence lower credit scores, which lenders use to gauge risk. Many have multiple sources of income, some of it in cash.

And some claim to have multiple sources of cash income that they don't really have. Hey, I've got an idea for how to tell whether these Hispanics applying for big California mortgages are just cheating on their income taxes or whether they're flat broke: Require a decent-sized down payment! Oh, wait, George W. Bush and Angelo Mozila said down payments were discriminatory, denying minorities their fair share of the American Dream.

During the housing boom, consumer advocates say it was both faster and more profitable for mortgage brokers and loan officers to put Hispanic families in loans that didn't require proof of income, but charged higher interest rates.

"They had them out the door in a fraction of the time," Bowdler said. "They were definitely getting more expensive loans."

Now, Hispanic households like the Cazares family of Visalia, Calif are caught up in the mortgage crisis. ...

The AP's analysis also found that education level is highly correlated with income and mortgage expenses. Nearly one in three of those without a high school or college diploma spend at least 38 percent of their income on housing, compared with only 12 percent of those with advanced degrees, the AP analysis found. ...

But they also say that mortgage brokers and lenders took advantage of the elderly, immigrants and the unsophisticated.

For decades, the government and most lenders considered homeowners who spent 30 percent or more of their income on housing to be financially strapped.

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

What comes after the Diversity Depression?

A reader makes an optimistic suggestion:

An idea:

Roughly put, one could say that the country went thru a huge crime crisis when we decided to overhaul the old oppressive criminal system, with its loitering laws, paucity of protections for the indigent, and broad latitude for the police to bust heads and search n seize those whom they pleased, in the name of Racial Justice. Certainly the old order had caused untold injustices and oppressions, and so we determined we were better than that. But the old order also incorporated a deep truth, that blacks and or the poor were much more criminal than whites and or the middle class, and that you really can often tell a bad guy by looking at him. And so the old system worked, as defined by containing crime.

But when we dismantled to old order, and questioned all its premises, and made Miranda rights and experimented with the mindless optimism of giving convicted murderers weekend furloughs, etc etc, we experienced a huge flowering of crime. We eventually crawled part way back, while retaining our moral disdain for the old system, and retaining a demureness about admitting out loud that blacks are more criminal per capita. But we quietly instituted race neutral tough on crime policies that were partly as effective as the old race conscious police tactics, and got over our embarrassment about the resulting prison population disparities. Not all the way back mind you, not even half way, but better than the worst of it, movies no longer predict a Manhattan solely fit for a penal colony.

So now we’ve gone thru a similar overhaul of the old system of credit and capital access, and are now feeling the hangover of a default spree as bad as the crime spree. We had the Civil Rights Crime Wave, now we have the Diversity Depression. Could that mean the solution will be to retain our horror at the old ‘redlining’ while growing resistant to ACORN over time, and shedding our maiden blushes at race neutral lending resulting in the familiar old patterns of home ownership that are the reverse of the familiar again patterns of prison population, though never mentioning their relative credit worthiness out loud?

Or is there a dynamic that will keep there from being a “tough on Lending” Giuliani of the financial world? And will it take us 2 decades like with the civil rights crime wave? And if tomorrow’s finances compare to yesterday’s like today’s crime compares to the 1950’s…are we all just screwed anyway?

How to do well by doing good

Now that people are starting to realize that America's economy has long-term problems that won't be solved just by throwing money at it in the short-term, it's time to start thinking about how the economy could become more efficient. We just can't afford all the luxuries that we thought we could when cruddy houses in California were averaging a half-mil each.

One obvious approach to making the economy work better is to take a skeptical look at the many ways "community organizers" exploit wealth-creators. PolicyLink, a leftist thinktank, has conveniently collected 27 strategies in its "Equitable Development Toolkit," with in-depth How-To Guides. Half of them sounded okay, at least on the surface (e.g., fighting asthma), but at least 13 look like ploys by which ethnic activists get cut in on a piece of the action:

PolicyLink Logo

Minority Contracting
Ensures that healthy local businesses owned by people of color are a basic component of strong, sustainable communities. These businesses generate job opportunities for residents, and keep money circulating within the neighborhood. This tool reviews major approaches for achieving parity for minority-owned businesses.


Local Hiring Strategies
An array of strategies that connect economically marginalized communities to regional job opportunities. For example, linkage programs can require that a percentage of jobs created by a commercial development go to local residents. Other programs link urban core and inner-ring suburban residents to employment opportunities around the region. Building such economic opportunity helps residents remain in their communities.


Affordable Housing Development 101
Increasing and preserving affordable housing stock is critical to community stability. There are a range of practices that are aimed at both existing housing and new development. The focus is typically protecting low-income residents most at risk of displacement from gentrification. Often strategies expand to include a spectrum of housing choices from rental to ownership in a range of income classes.


Expiring Use: Retention of Subsidized Housing
Protects "expiring use" subsidized housing from losing its affordability-designation and reverting to the private market. This tool clarifies ways to protect affordable housing originally supported by HUD, with a special focus on regions with extreme housing shortages, and not coincidentally, considerable amounts of gentrification.


Commercial Linkage Strategies
A range of programs and fees that tie economic development to the construction of affordable housing. Most require developers of new commercial properties to pay fees to support affordable housing construction. Linkage programs support smart growth, mitigate rising housing costs caused by economic development, and provide a dedicated source of revenue for affordable housing.


Commercial Stabilization
This tool reviews effective techniques employed by community-based organizations to preserve cultural organizations and longstanding commercial enterprises that define the historic character of communities. These institutions are frequently the most vulnerable to displacement in gentrifying neighborhoods.


Developer Exactions
Requires new commercial developments to contribute fees to the development of affordable housing, community services and infrastructure. Creative nonprofit organizations are utilizing exactions as an anti-gentrification tool to finance services such as day care, cultural centers, job training, below market rate housing, and ride sharing.


Living Wage Provisions
Ordinances that ensure the employees of public contractors, private contractors receiving public sector funding, and public employees are paid wages at pace with regional cost of living measures. Higher wages achieved through living wage ordinances assist low-income residents in remaining in their communities, lead to greater stability in the workforce and increase the municipal tax base.


Rent Controls
A review of legal and programmatic protections for renters to slow the pace in markets with rapidly escalating rental prices. The effectiveness and implications of rent control has been heavily debated for as long as such ordinances have existed. This tool reviews their potential application in gentrifying contexts, as well as the compeimentary techniques necessary to make this a useful strategy.


CDC's with Resident Shareholders
An emerging tool that offers low-income/low-wealth residents the opportunity to own equity in real estate projects spearheaded by community development corporations (CDCs). Owning CDC project stock provides residents with financial benefits and voice in the neighborhood development process. This tool directs profits from development back into the community, ensuring benefit for existing residents.


Community Reinvestment Act
Congressional mandate that financial and depository institutions, such as commercial banks, help meet credit needs of the communities in which they operate, including low- and moderate-income neighborhoods. To utilize the Act as an anti-displacement tool requires diligent monitoring to ensure investment occurs, as well as strategic planning to direct investment to benefit residents.


Inclusionary Zoning
Land use regulation mandating a percentage (usually 15-20%) of the housing units in any project above a given size be affordable to people of low and moderate incomes. The developer can build the housing or contribute to a fund to develop it elsewhere. This tool has particular relevance in gentrifying communities, where high-income and luxury apartment developments can quickly overrun the existing low- and moderate-income housing stock.


Housing Trust Funds
Public funds, established by legislation, ordinance or resolution, to receive specific revenues dedicated to affordable housing development. The key characteristic of a housing trust fund is that it receives on-going revenues from dedicated sources such as commercial development taxes, fees on loan repayments, and transfer taxes. These funds can stabilize communities facing gentrification pressures.


For some reason, though, I don't think Barack Obama is going to take the lead in cutting parasitical community organizers out of the loop.

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

February 4, 2009

Countrywide

A standard response to the argument that the Community Reinvestment Act played a role in the (heavily minority) mortgage meltdown is to claim that most mortgages weren't covered under the CRA. (See, for instance, "11 Racist Lies Conservatives Tell to Avoid Blaming Wall Street for the Financial Crisis" by Sara Evans on AlterNet).

After all, look at giant mortgage-monger Countrywide Financial, which had been the biggest originator of mortgages in the country before it stumbled badly in 2007 and was bought by Bank of America in 2008.

Much of Countrywide wasn't officially regulated by the CRA. (Countrywide did operate a bank, Countrywide Bank, but it didn't make many acquisitions, so the CRA wasn't particularly relevant to Countrywide's bank.)

First, though, Countrywide was more the exception than the rule. Fortune wrote in 2003:

Countrywide, of Calabasas, Calif., near Los Angeles, is practically a pure play in mortgages. It's the only independent left in an industry now dominated by big, diversified banks, from Wells Fargo to Citigroup.

(Some big banks had mortgage subsidiaries that weren't technically covered by the CRA, but most acted as if they were under the CRA, which is a very loosely written statute intended more to put the fear of regulators and community organizers into banks rather than to spell out the banks' precise duties.)

Second, Countrywide's celebrated CEO Angelo Mozilo, who provided so many politicians in the Friends of Angelo club, such as Sen. Chris Dodd, with "superprime" low interest mortgages, announced in a fancy 2003 speech at Harvard that Countrywide was pledging $600 billion for "previously underserved Americans" over ten years -- exactly like so many CRA-covered banks did (e.g., Bank of America pledged $1500 billion and WaMu $375 billion).

Indeed, Mozilo was one of the loudest voices in favor of closing the racial gap in home ownership.

On the other hand, Countrywide appears to have pretty much known the score about the quality of the mortgages it was writing. It seldom hung on to mortgages it originated, instead bundling them up into mortgage-backed securities and dumping them on deluded buyers.

Countrywide chased hard after likely deadbeats, and piled on seemingly minor fees and conditions that added up to huge profits during the height of the housing bubble.

Why? Because borrowers who aren't good with money were easy to exploit upfront. (The problem turned out to be that just as these debtors weren't good at negotiating the terms of their mortgages, they also weren't good at earning enough to pay their mortgages, so defaults skyrocketed once housing prices in California, Countrywide's home base, stopped rising.)

How to explain Countrywide's behavior?

Generally, I find most people aren't cynical villains. They really come to believe as a general principle whatever they think is in their interest.

I'm not sure if that applies to Countrywide CEO Angelo Mozilo, however. Countrywide, it appears, was less a Kool-Aid drinker than a Kool-Aid peddler.

Perhaps one reason it was a big fan of the CRA was because Countrywide sold its junk mortgages to CRA-regulated banks who needed CRA credits for lending to minorities and low income folks. From Countrywide's old website (now scrubbed from the Internet after B of A's acquisition of Countrywide):
"The result of these efforts is an enormous pipeline of mortgages to low- and moderate-income buyers. With this pipeline, Countrywide Securities Corporation (CSC) can potentially help you meet your Community Reinvestment Act (CRA) goals by offering both whole loan and mortgage-backed securities that are eligible for CRA credit."
For sheer shameless promotion of the reigning conventional wisdom about the need to close racial gaps in home ownership rates, Mozilo's showcase Harvard speech in 2003 compares to George W. Bush's speeches of the same vintage:

The American Dream of Homeownership: From Cliché to Mission

Presentation by Angelo R. Mozilo Chairman

President and Chief Executive Officer, Countrywide Financial Corporation & Chairman, Countrywide Home Loans, Inc.

The Joint Center for Housing Studies of Harvard University

John T. Dunlop Lecture

Sponsored by The National Housing Endowment Washington, DC

February 4, 2003

It’s a personal honor because over 34 years ago my partner and I founded Countrywide with the objective to lower the barriers and open the doors to homeownership. We wanted to make the American Dream of Homeownership something tangible – something to which people could do much more than just aspire. We wanted to make it something they could access, afford and achieve. We wanted to prove that our company could and would succeed by offering home loans to hard-working families – of all races and of all ethnic backgrounds. In other words, it has always been our intention to be more than a corporation that makes mortgage loans; we wanted to be a force in making positive differences in people’s lives.

Whether you represent government agencies or GSEs, non-profits, faith-based groups or industry associations, communities or even Countrywide competitors, we together have secured the future for many families in this great Country. For the people in this room, the American Dream of Homeownership is not cliché. It’s our cause. It’s our mission. The past few years have been remarkable ones for our industry. Lower interest rates, the push for greater diversity in homeownership, and massive immigration into the U.S. have created both challenges and opportunities. However, despite the fact that approximately $2.5 trillion in mortgage loans were made in 2002, the gap between low income and minority homeownership, and what is classified as white homeownership, remains intolerably too wide. Therefore, expanding the American Dream of Homeownership must continue to be our mission, not solely for the purpose of benefiting corporate America, but more importantly, to make our Country a better place.

... The overall U.S. homeownership rate, which was at 44 percent in 1940, hit 68 percent by the end of the third quarter of 2002. Historically low interest rates along with new, creative and flexible underwriting techniques are continuing to fuel a record period of growth for our industry. ... And, increasingly, the sub-prime market is boosting that number and the industry as a whole. During the first nine months of 2002, sub-prime originations rose an estimated 26 percent over the same period in 2001 – outpacing the overall market. ...

It started with the New Deal, and now, we’re in a new century. But through it all, one thing has remained, more or less, constant. This constant is our challenge. And this challenge is to increase the access to affordable housing. And in order to do this, we must close the homeownership gap that still exists. ...

As President Bush said last October: “Two thirds of all Americans own their homes, yet we have a problem here in America because fewer than half of the Hispanics and half of the African Americans own their home. That’s a homeownership gap. It’s a gap that we’ve got to work together to close for the good of our Country, for the sake of a more hopeful future. We’ve got to work to knock down the barriers...”

While the number of minority homeowners has advanced recently, climbing from 9.5 million in 1994 to 13.3 million in 2001 – an increase of 40 percent – the fact remains that it is still not at a level equal to that of white homeownership. And as President Bush pointed out, the homeownership rate for African Americans is 47 percent and for Hispanic Americans it is 48 percent, a stark contrast to the homeownership rate of 75 percent for white American households. That means there is currently a homeownership gap of over 25 points when comparing white households with African Americans and Hispanics. My friends, that gap is obviously far too wide. It has been far too wide for far too long. And when adding new factors into the equation – like an influx of new immigrants or continued reduction in the supply of affordable housing – it has the potential to become far worse.

So tonight, I want to discuss why that gap persists and how Countrywide is trying to address it. ... If we don’t get a better handle on these issues, as I will discuss, I would argue that the homeownership gap will not only remain, but there is a good chance it will widen and the homeownership rates among low income and minority borrowers will continue to be depressed. ...

One of the more obvious resolutions to the Money Gap is the elimination of down payment requirements for low-income and minority borrowers. Current down payment requirements of 10 percent or less add absolutely no value to the quality of the loan. It is the willingness and the ability of a borrower to make monthly payments that are the determinants of loan quality. Over the past 50 years, I have personally interviewed thousands of potential homebuyers and in the vast majority of cases, the barrier standing in between them and the house of their dreams was the down payment. That barrier must be eliminated by offering customized programs to those borrowers who cannot meet the current down payment requirements.

Equally important, we must reduce the documentation required to make any and all loans; we should be able to approve loans in minutes, rather than days, and close loans in days, rather than weeks.

... Unfortunately, sometimes restrictive regulations, fees, and codes are even intentional – established by those who don’t want affordable housing, at least not in their neighborhoods. And that should remind us that affordable doesn’t necessarily mean accessible. Although it may not be the issue it once was, discrimination still exists. And make no mistake – it has an impact on the homeownership rate of minority families. Therefore, it is critical that our governments must work to solve the issues of restrictive regulations, fees, codes and land use. ...

Just over ten years ago, we launched our formal affordable lending program called House America. Our hope was that with flexible underwriting guidelines, we would enable more people to qualify for home loans, and by having fewer credit and employment constraints, more families would achieve their American Dream. Back in 1992, we started with a $1.25 billion commitment to House America. In 2001, as part of our House America campaign to provide residential financing in under-served communities, we increased our commitment to $100 billion with a goal of obtaining that objective by 2005. I’m proud to say that in just 22 months, and not five years as originally planned, we have reached that goal.

So I’d like to use this forum this evening to say that Countrywide is once again re-dedicating itself to expanding the dream of homeownership. Tonight, I am announcing the extension and expansion of our current 5-year, $100 billion challenge through the year 2010, with the commitment to fund a total of $600 billion in home loans for previously underserved Americans in this decade.

Countrywide is proud to make this commitment. We’re excited about our new goal. We’re eager to reach that goal. And, I can assure you that we will reach that goal. As we had envisioned in 1992, House America offers unique loan products that have been specifically designed to meet the needs of minority and low- to moderate- income borrowers. But it also does more. It has become not just a lending program, but a more comprehensive effort that devotes considerable intellectual and financial resources to increasing homeownership among minority and low- to moderate-income individuals and families. ...

It is an effort that, in addition to providing loan products with flexible underwriting criteria such as home rehab loans, also specializes in being able to layer financing programs through participation in hundreds of down payment and closing cost assistance programs. [The IRS finally declared these to be a tax evasion scam in 2006.] House America also offers other tools to ensure that we are doing everything in our power to expand the opportunities for home-ownership. It is an effort absolutely committed to education and outreach, both in English and Spanish, both online and in local communities, both at local home-buyer fairs and at lending workshops, and with our many partners, like Fannie Mae, Freddie Mac, FHA, the Congressional Black Caucus, the National Council of La Raza, AFL-CIO, and faith-based groups across the Country, just to name a few. I want to specifically and especially recognize Franklin Raines and his entire team at Fannie Mae for providing a great deal of the resources that have made it possible for us to achieve our House America objectives. [Raines called Countrywide a "paragon" of nondiscrimination, while Mozillo gave Raines the special "Friends of Angelo" rate on his mortgage.] In 1993, Countrywide opened four dedicated House America retail branches, and now we have 23 staffed with local and diverse professionals in major metropolitan areas all across the Country.

It is an effort that has enabled Countrywide to become the number one lender to Hispanics for the last 6 years and the number one lender to African Americans for the past 3 years. ...

Fortunately Countrywide isn’t alone – there are other mortgage lenders and financial institutions that are all making positive contributions. And the lesson we can take away from this is the following: for a long time, when it came to increasing low-income and minority homeownership, the message has always been “we should,” or “we must.” But the fact is, “we can,” and “we are.” Now, we must take the energy and expertise and the ideas and the innovation that we’ve brought to increasing the overall homeownership rate, and apply them to creating reasonable parity among homeowners. It is time, once and for all, to narrow and ultimately eliminate the homeownership gap. I believe we can eliminate the gap and it is, in large part, why I got into this business.

But to do so will require us to resolve three structural obstacles: ...

“THE UNDERWRITING PROCESS” As many of you know, after the loan application is taken, the data is input into an automated underwriting system to support the lender in accurately assessing the risk. These systems look at a multitude of factors in making this assessment including credit history or scoring, collateral, and the ability to pay.

I have two issues with our industry’s current underwriting methodology. The first is that the automated underwriting systems kick far too many applicants down to the manual underwriting process, thereby implying these borrowers are not creditworthy; and the second issue is that once arriving in the hands of a manual underwriter, the applicant is subject to basic human judgment that can be influenced by the level of a borrower’s credit score. ...

However, far too many borrowers are being referred to an arduous manual and cumbersome underwriting process. To me, that is clear proof that the level deemed to be an acceptable risk by our automated underwriting systems is much too high. While many of these borrowers may ultimately be approved, it is because the manual process, or human underwriter, has analyzed non-traditional factors such as the borrower’s rent and utility payment history, which should be embedded in the automated underwriting process.

Now, let me address my second issue, and that is the manual underwriting process itself. While Countrywide’s own internal evidence supports the notion that manual underwriters are approving a good majority of the loan applications that get referred, the fact of the matter remains that a human is involved in this step of the process thereby creating the possibility that a decision is made based upon the level of the borrower’s FICO score.

We cannot deny that human beings aren’t influenced by FICO scores. If we can be influenced by a high credit score, then it is only logical to assume that we are equally influenced by a low one. Therefore, the underwriter – either because he or she views the current system as relatively inflexible or because he or she chooses to err on the side of safety – may decide not to override a system that has been deemed to be an accurate forecast of risk. Thus, the current protocol intentionally creates an environment where borrowers with lower FICO scores are subject to being disproportionately affected by the manual underwriting process. I say we need to amend these systems to do more than just approve the “cream of the crop,” by creating a system that says “no” only to those deemed unwilling to make their mortgage payments. We must understand that the credit scoring system we have built is still imperfect, and that if we are to have any chance at closing the homeownership gap, we must make a serious investment in improving its capacity and capabilities. We must do this through improved automated underwriting models that take into account more variables, and measure true indicators of risk and willingness to pay. We need an ongoing educational process, not only at the primary market level, but also in the secondary markets and with mortgage insurers to help lead this effort to recalibrate the scoring system. And finally, it must be recognized that borrowers with credit scores below what is currently defined as “creditworthy” levels can still be acceptable credit risks. Thus, the credit score bar dividing creditworthy from high-risk borrowers, must be substantially lowered by the GSEs [Government-Sponsored Enterprises: i.e., Fannie Mae and Freddie Mac], the secondary market in general, and with bank regulators. The GSEs have made good progress over the last few years in expanding their credit criteria, but I encourage them to become much more aggressive in this regard.

From the NYT in October 2008:

Shortly after he became chief executive [of Fannie Mae in 2004], Mr. [Daniel] Mudd traveled to the California offices of Angelo R. Mozilo, the head of Countrywide Financial, then the nation’s largest mortgage lender. Fannie had a longstanding and lucrative relationship with Countrywide, which sold more loans to Fannie than anyone else.

But at that meeting, Mr. Mozilo, a butcher’s son who had almost single-handedly built Countrywide into a financial powerhouse, threatened to upend their partnership unless Fannie started buying Countrywide’s riskier loans.

Mr. Mozilo, who did not return telephone calls seeking comment, told Mr. Mudd that Countrywide had other options. For example, Wall Street had recently jumped into the market for risky mortgages. Firms like Bear Stearns, Lehman Brothers and Goldman Sachs had started bundling home loans and selling them to investors — bypassing Fannie and dealing with Countrywide directly.

“You’re becoming irrelevant,” Mr. Mozilo told Mr. Mudd, according to two people with knowledge of the meeting who requested anonymity because the talks were confidential. In the previous year, Fannie had already lost 56 percent of its loan-reselling business to Wall Street and other competitors.

“You need us more than we need you,” Mr. Mozilo said, “and if you don’t take these loans, you’ll find you can lose much more.”

Then Mr. Mozilo offered everyone a breath mint.

Let's let Mr. Mozillo have the final words:

... And according to the White House, meeting their goal of 5.5 million new minority home-buyers within the decade will add $256 billion to the housing sector. [A connection between Bush and Mozilo is one that historians should explore -- their speeches sound like they may have been talking to each other. Mozilo wanted to get richer and Bush wanted Hispanics to get mortgages so they'd become Republicans.]

... For our industry and, more importantly, for our Country, together, we can make this the beginning of a great day. Because increasing homeownership among lowincome and minority populations remains a great challenge – but it is one that has been entrusted to our collective hands. And the wonderful families I’ve talked about are proof that we can do the job. Our experiment is working. Success can be within everyone’s grasp.
Oops.

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