Re: financial leverage
Short-term I would lose about 1-2% percent on the borrowed fund but in the long-term I would gain 1-2% when I lock in a long-term bond that has a coupon rate that is above the borrowed rate. I don't see how bond would be a loser if interest rates goes higher since I will locking in a bond that yield a higher coupon rate then the borrowed rate. If you plan to resell your bonds before maturity, the rising rates will cause the resell value to go down accordingly. If you plan to hold the bonds to maturity, the interest you receive will probably be a net loss in constant (inflation-adjusted) dollars, because interest rates do not rise for no reason. If rates on long term bonds rise, it will probably be in large part because of rising inflation. With our government increasing the money supply to stimulate the economy and the value of the dollar vis a vis other currencies in a sustained downward trend, both higher inflation and higher interest rates are likely in the future. ~Alypius
Re: MVT and policy portfolios
- Original Message - From: fabio guillermo rojas [EMAIL PROTECTED] To: alypius skinner [EMAIL PROTECTED] Cc: [EMAIL PROTECTED] Sent: Saturday, October 18, 2003 11:47 AM Subject: MVT and policy portfolios - people spend an inordinate time satisfying extreme voters, even after winning a party nomination They're trying to put together a winning coalition by targeting a variety of market segments. You don't see General Motors or Altria/Philip Morris targeting just the median car buyer or median cigarette smoker. ~Alypius Well, this is not a prediction of the median voter theorem. If you have N policies, the MVT would predict that the candidate would gravitate to the center of each policy. What you are suggesting is that the candidate would go to the extreme position for each policy, as defined by some subpopulation who cares about the issue. Fabio Yes, special interests--sometimes including the opinions of the rulers' own social class--are often more influential than the median voter preference. Furthermore, if a politician can put together a winning coalition--let's say one that reliably gives him about 55% of his constituents' votes-- he can usually ignore those market segments who are not part of his winning coalition. Sometimes we also see politicians neglecting part of their coalition--such as Democrats neglecting blacks or Republicans neglecting religious social conservatives--because, in a non-parliamentary system, they can be safely taken for granted. Thus, both President Bushes courted the homosexual lobby, because they knew that the Democrats would not nominate anyone the social conservatives, however unhappy, could vote for. (And I'm fairly sure, if David Duke could win the Democratic Party's presidential nomination, that he would carry the black vote in the general election.) The Democrats are enthralled to a coalition of special interests which would never allow someone acceptable to social conservatives to be nominated, just as the Republican coalition would never allow anyone to be nominated who was not acceptable to big business interests. As another example, notice how both Democrats and Republicans in Presidential elections always nominate someone whose views on abortion are to the left and the right respectively of the median voter, who, according to polls, prefers more restrictions than the Democratic nominee will endorse and fewer restrictions than the Republican nominee is willing to allow. So the two parties, rather than competing for the median voter, will compete for those market segments which would not drive away--or be driven away by--the other segments that make up the core of *either* party's coalitions. In a close election, this often means that both sides compete intensely for that segment of likely voters which is least informed, least consistent in its opinions, and most politically clueless. These people are often the kingmakers in democracies. Related to this is the question of whether there really is a median voter. Let's take 10 issues--abortion, gun control, gay rights, trade policy, tax rates, immigration, middle east policy, racial preferences, CO2/global warming policy, and SDI/star wars missile defense. What percentage of the electorate is in the middle quintile (if we could quantify these issues) on all 10? There also is the weight that each voter gives to each issue. For significant numbers of voters, abortion or support for Israel or support for Kyoto/the environment or gay rights positions or gun control or affirmative action policies will outweigh all other considerations. Much more often, even though one is not dealing with a true single issue voter, taking the right or wrong position on one issue may outweigh one's position on 2, 3, or more other issues that are a lower priority for a given voter. There is also the question of how committed an office seeker seems to be to a given issue. For example, among Republicans we often see the following tightrope being walked: the office seeker tries to be sufficiently supportive of traditional values that he endears himself to the social conservatives in his party--especially in the primaries--but not so supportive that socially liberal Republicans in the primaries (or independents in the general election) will think that he really means it. On a weighted list of issues, there may not be enough median voters to bother with. Putting together a winning coalition of market segments is probably a surer path to victory. ~Alypius
Re: Median Voter Theorem, Part Deux
- people spend an inordinate time satisfying extreme voters, even after winning a party nomination They're trying to put together a winning coalition by targeting a variety of market segments. You don't see General Motors or Altria/Philip Morris targeting just the median car buyer or median cigarette smoker. ~Alypius PS--Fabio, this reply may not appear on the list. I think Bryan has been diverting my posts to some cyberfile 13. The last half dozen or so times I attempted to post, nothing ever appeared on the list, so I've pretty much given up trying. But I can still read everyone else's messages, so you can reply to me on the list if you wish to.
Re: immigration: net gain or net drain?
Of course, if the losses from immigration restrictions are greater than you might think, the gains of weaker restrictions are also greater than you would think. When you double the number of immigrants, you will be admitting a lot of people with a lot of surplus, not just marginal immigrants. I'd like for you or someone to attempt a crude, ball park estimate for me of the net gains from immigration in a specific case. Less than 100 years ago, Kosovo was a mostly Serbian region of the Federal Republic of Yugoslavia. Then high levels of legal and illegal immigration from neighboring Albania made it a mostly Albanian region. How much better off is Yugoslavia today as a result of past immigration than it would have been if it had tightly restricted immigration? How much better off are the few remaining Serbs who have not been driven out of Kosovo or killed than they would have been if foreign immigration had been tightly restricted for the last 100 years? (Of course, one can always argue that the immigrants benefited, but how did the receiving party benefit? How was it in their best interest to open the doors?) Another example is Palestine. Now I know the natives of Palestine had no control over immigration policies in the late 19th and early 20th centuries; that was a British decision. But how much better off is the *average* Palestinian--most of whom live in the West Bank and Gaza strip--as a result of Jewish immigration? And since immigration makes their lives so much better, why is there so much unrest? A third example: American immigration to the Mexican state of Texas certainly benefited the immigrants; but as a result, half of Mexico was, a generation later, off limits to most Mexican citizens until today. How much did the average member of the receiving party benefit from allowing large scale Anglo immigration to Texas? If current immigration policies in the United States give the Democrats a permanent lock on the White House beginning in 2008, and eventually a lock on Congress as well, how much better off will the receiving party and their posterity be as a result? In California, would Cruz Bustamante be a frontrunner in the special election for governor in the absence of large scale immigration from Mexico? ~Alypius
Re: Economics and E.T.s
Well, we have reaches a level of life exactly equal to our own, and we haven't colonized anything beyond our planet. The tehnology is probably there, but the costs are high and the benefits are unclear. The same maybe true 200 years from now. (Gee, I hope this is on topic!) Anyway, a physicist said one time that any extraterrestrial visitors probably would have to live in our little corner of the Milky Way. Since the speed of light functions as an absolute speed limit, the length of time necessary for distant interplanetary travel poses logistic challenges that are probably insurmountable with any possible technology. Also, think about this: On our own planet, there are thousands, maybe millions of different forms of life, from humans to peat moss to bacteria. The overwhelming majority of species on earth are things like insects and bacteria -- not humans. If there were life elsewhere in the universe, isn't there a higher probability that's it's on the level of bacteria rather than humans? Oh, absolutely. Even if life is common, intelligent life probably isn't. It took life on earth many hundreds of millions of years to evolve an intelligent life form, and even then it was unlikely. If some disaster had not wiped out the dinosaurs, there might never have evolved a niche for primates. And if the Pleistocene ice age had not begun about 3 million years ago when the isthmus of Panama moved into its present position (which altered the oceans' thermohaline circulation in important ways) and about the time that early hominids evolved in Africa, Homo sapiens, or even erectus, might never have evolved. Our primate ancestors might have remained in the rain forest without the drying and cooling effects of the ice age. And even primates that adapt to savannah do not necessarily become intelligent--just look at baboons. And even if early Homo had evolved, in the absence of our periodic glacial episodes, his IQ probably never would have risen to a high enough level to create industrial civilization. IQ, brain size, cranial size, and the latitude at which a population probably lived during the last glacial era (circa 120,000 BC to c. 11,000 BC) are all correlated. And even now either a return to ice age conditions or, in the case of continued interglacial conditions, a gradual decline in intelligence due to unfavorable differential fertility trends, might be sufficient to end civilization. Furthermore, it is not only intelligence that makes technological civilization possible, but prehensile thumbs and bipedalism. It all has to evolve as a package. When the first humans came to the western hemisphere, why didn't they find another intelligent species already here, having evolved independently? Because the chance of intelligent life evolving anywhere, at any time, is remote. Intelligent species don't even appear to be very successful. If you look at every species of ape but man, they are marginal species. Their sparse populations eke out an existence in specialized environmental niches and do not appear to be very adaptable. Even Homo sapiens was almost extinguished following the eruption of a super-volcano about 72,000 BC. It was only with the invention of agriculture at the beginning of this interglacial that our numbers multiplied enough to give our species the (misleading?) appearance of biological security. ~Alypius
Re: HEAVEN'S DOOR AFTER A YEAR - George J. Borjas
Perhaps even more fundamentally, if the Americans who pay the immigrants didn't benefit by paying the immigrants the Americans wouldn't pay them. Obviously both parties--American and immigrant--benefit from the exchange of money for labor. Sure *some* Americans benefit--just like some Americans would benefit from invading Communist China, as I pointed out before. But do Americans in the aggregate or on average benefit? Where does this benefit show up in the economic stats? Cuban-American immigrant Borjas says we benefit to the tune of 10 billion dollars in an economy of 10 thousand billion--that's a .001% benefit to the average US citizen, and it may well be canceled out or worse by net negative externalities, which are much easier to enumerate than positive externalities, perhaps because there are more of them. ~Alypius Skinner
immigration's effect on per capita GDP
Robert Book wrote: Do any of these studies take into account the effect of immigrants on demand? It would see these people have to eat. Judging from the article below (Note carefully what Professor Borjas is saying here. Sure, those immigrants who work do raise overall GDP. But the bulk of that increase goes to the immigrants themselves, in the form of wages. The benefit to native-born Americans, after everything is taken into account, is infinitesimally small.), the effect of immigrants on demand does appear to be taken into account. What I want to know is whether the labor economists' studies take into account the cost of the immigrants' crime rates (which are above the native born average), their welfare dependency (again, above the national average), and the higher transaction costs and ethnic friction and rivalry that comes from high rates of immigration. Most immigrants also come from cultures that are more socialistic than the United States and, upon gaining citizenship, vote heavily for the more socialistic of the two major parties. (An exception here may be the relatively small East Asian/Oriental population, which seems to straddle the fence, although the large Chinese element seemed to lean toward the Democrats during Clinton's second term, when he was perceived as China-friendly, even though it may have been at the expense of US national security. Miami's Cubans are also an exception, perhaps because most Cuban refugees were from Cuba's more well-to-do classes and also tend to be vehemently anti-Communist. But exceptions are rare and relatively small.) It always struck me as odd that contemporary libertarians (although not von Mises or the objectivist Ayn Rand) are the strongest supporters of open borders, even though most of the people who would enter under such an arrangement would be hostile to libertarian political thought. ~Alypius Skinner http://www.vdare.com/pb/cc_times.htm Contra Costa Times December 4, 1999 Immigration policy stupid, evil and hurting Americans By Peter Brimelow IN AMERICA, WE have a two-party system, a Republican congressional staffer is supposed to have told a visiting group of Russian legislators some years ago. There is the stupid party. And there is the evil party. I am proud to be a member of the stupid party. He added: Periodically, the two parties get together and do something that is both stupid and evil. This is called -- bipartisanship. Our current mass immigration policy is a classic example of this fatal Washington bipartisanship. It is a stupid policy because there is absolutely no reason for it -- in particular, Americans as a whole are no better off economically because of mass immigration. It is an evil policy because it second-guesses the American people, who have shown through smaller families that they want to stabilize population size. Unfortunately, our current immigration policy is consuming the environment with urban sprawl, hurting the poor and minorities with intensified wage competition, and ultimately threatening the American nation itself -- what Abraham Lincoln called the last, best hope of earth -- with cultural and linguistic fragmentation. And, of course, the current mass immigration policy is bipartisan. Both major party leaderships have tacitly agreed to keep the subject out of politics. No single figure is more responsible for this than Sen. Spencer Abraham, R-Mich., chairman of the Senate's Immigration Subcommittee. Abraham was a key figure in sabotaging the most recent chance of reform, the Smith-Simpson immigration bill, in 1996. Ironically, this was a truly bipartisan measure, proposed by Republicans but based on the work of the Jordan Commission, headed by the former black liberal Democratic Congresswoman Barbara Jordan. She recommended almost halving immigration, in part because of its impact on the poor. The economic stupidity of current mass immigration policy is illustrated by a brilliant new book, Heaven's Door: Immigration Policy and the American Economy (Princeton University Press). The author, Professor George Borjas of Harvard University's John F. Kennedy School of Government, is widely regarded as the leading American immigration economist. And he is an immigrant, arriving here penniless from Castro's Cuba in 1962, when he was 12 years old. Borjas has every reason to favor immigration. He writes movingly about his own early experiences, and compassionately about the immigrant waves that have followed him. But, as a scholar, he recognizes what he calls accumulating evidence that immigration has costs as well as benefits. My thinking on this issue has changed substantially over the years, he admits. Professor Borjas' devastating findings: The current wave of mass immigration is not benefiting Americans overall. All of the available estimates suggest the annual net gain is astoundingly small, writes Professor Borjas, ... less than 0.1 percent of the Gross Domestic Product. Roughly: less than
