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Thursday, June 27, 2019

Traveling with kids

Before I had kids, I would see the families trying to herd their many feral cats at the airport and think, phew, so glad that's not me. Then, when we had one and came to the airport loaded down with the stroller/carseat/pack 'n play combo, I'd see the families with the double strollers and two huge carseats etc., and think, phew at least that's not me. Now I've been sitting in Dulles for eight hours with our two kids waiting for a multiply-delayed-and-probably-going-to-be-cancelled flight and I still think, hey, we could have seven kids and it would be worse. But in reality, people with seven kids rarely take flights. If we had seven kids, we'd have driven and reached our destination by now.

Saturday, June 22, 2019

Meritocracy and the false sense of entitlement

I have an essay offering a non-comprehensive defense of meritocracy coming out shortly available here (it was bound to happen sooner or later), but among the things I couldn't discuss there for space reasons was an argument I hear everywhere that goes something like this:
Meritocracy is an especially terrible way of selecting our "leadership class" because it makes those selected by it believe that they're uniquely deserving of their positions because they earned them through their own talent and hard work, when in fact they mostly stumbled into them through some combination of luck, money, and parental machination on their behalf. They did not "build that," but meritocracy deludes them into believing they did. As a result, meritocrats have false confidence in their ability to rule and they mess stuff up for everyone else in appalling and irresponsible ways, like the housing bubble in 2008. Plus, they are insufferable, entitled jerks. 
This strikes me as superficially logical, but untrue for the following reasons:
1) Talent is a matter of luck. If you actually believe that you got where you are b/c you have natural talents that others lack, you'd have no more reason to see your lot as a matter of great personal desert than if you got there b/c you were born into it or won it in a lottery. In fact, if you had to buy your position, you might have more reason to believe you earned it, since you earned the money to buy it. (Unless you merely inherited that money, in which case, back to luck.) So oligarchy would be more open to this criticism than meritocracy.

Now, if by a false belief in desert, these critics mean that meritocrats believe they're qualified for positions they really aren't qualified for, or treat their positions with insufficient humility, then it's still not clear why this would be different from other regimes and other ways of distributing positions. It's not as though the rulers in an oligarchy or aristocracy feel unqualified for their positions and consequently discharge them with greater humility. Every regime legitimates its rulers and the means by which they rule. In an aristocracy, people believe that good birth qualifies a person for rule just as ardently as we believe that great talent does.

Recall how the soldiers react to seeing the czar in War and Peace. They feel that they are in the presence of divinity. No one yells, "What's the big deal? He's just Alex, a regular guy who had the good luck of being born into the royal family!" Democrats say that to aristocrats. But the aristocrats say to the meritocrats in return (as also occurs in War and Peace), "Why should that guy be in charge? His only qualification is that he had the good luck to be able do well on an exam!" Each sees his own way of selecting people for ruling positions to be based on the most relevant qualifications. It's just that those qualifications happen to be entirely incompatible.

2) History fails to demonstrate that meritocrats are uniquely inclined to screw things up for everyone else. Nearly all rulers, no matter how they are chosen, have demonstrated a great knack for this. It is a problem of rule simply, not to be solved by different means of selection. Nor are meritocrats clearly more irresponsible or less conscientious than other rulers. (Think of the top 10 atrocities committed in the last century and I doubt that any of the ones on your list will have been perpetrated by Ivy League graduates. Just sayin'.)

Ross Douthat and others have located this criticism specifically within American history, arguing that before the Epoch of the Irresponsible Meritocrats was the Epoch of the Noble WASPs, who understood the gravity of their responsibility to others and ruled accordingly. Now, I don't mean to swat at the WASPs, who seem commendable in many ways, but it's easy to applaud the people who pulled us through past crises b/c we know they were successful. It's much harder to know if the people navigating us through current crises will be successful, b/c such is the nature of the present. Also, please remember McGeorge Bundy, a WASP who irresponsibly got us into the Vietnam War and was also a great promoter of meritocracy. Also, what a name.

Only in the narrowest of terms - as a criticism of those elite college grads (not a few of them, either) working in high finance - does this claim seem plausible to me. It's possible that investment bankers and hedge fund managers etc. have behaved irresponsibly in the past 20 years. But even then, I'm not sure this should be attributed to their educations or upbringings more than to their chosen line of work. Isn't it possible that finance lends itself to this kind of irresponsible detachment and sense of entitlement, regardless of how its practitioners were educated or selected?

3) As a matter of personal disposition and character, are meritocrats bigger or more arrogant assholes than anyone else in America? I don't really know. For one thing, this claim seems to be leveled at quite different groups of people.

First, there are the frat bro types, often the larval stage of the mature finance bro. These people may have boorish tendencies, but they're not really meritocrats either. People hate them for reasons having little to do with their test scores and grades, and often because they believe they're advancing through meritocratic institutions and channels without the requisite qualifications, but through some combination of old boys network connections, wealth, or sociability that are all the antithesis of meritocratic. So it's a weird thing to say you're against the meritocracy b/c it produces frat bros when in fact frat bros are actually a holdover species from a previous era trying to adapt to a meritocratic ecosystem.

Second, there are the pointy-headed "managerial liberals." These types are accused of lacking sympathy or empathy or even basic knowledge of the people they're managing. They're arrogant b/c they believe politics is a science, and they can just manipulate data to obtain optimum social efficiency. Like that take-down of Cass Sunstein. You know what I'm talking about. I laughed too, and I certainly think you can criticize this approach to politics (as you can criticize people for writing, frankly, too many books), but is the problem with Cass Sunstein that he personally lacks empathy? (I mean, maybe, I don't know him, but it seems beside the point.) What this criticism seems mainly to amount to is that a particular subset of meritocrats - centrist, social science-beholden liberals from about 1980-2012 who clearly meant well - have not hit upon a good method of translating their good intentions into public policy.* Let's think of better methods. Ok.

Finally, there is the very broad group of "elites." The anger against them is like the criticism of managerial liberals, but more diffuse. This criticism is partisan in the sense that the right likes to use it against the left at the moment, but also bipartisan, generally leveled on behalf of those out of power in various ways (not just government, but also culture and business, etc.) against those in it. That means it's also leveled by meritocrats not yet on top against those already on top (ie, twentysomething writers from liberal arts colleges against fiftysomething editors from liberal arts colleges, or twentysomething unemployed leftists against fiftysomething Obama administration officials).

In a sense, those in ruling offices are entitled. They're entitled to rule - to edit, or nudge. And we tend not to like being ruled, even though we select our rulers ourselves. As Hobbes said some years before the creation of the SAT, "Hardly anyone is so naturally stupid that he does not think it better to rule himself than to let others rule him." This is a problem for the stability of all regimes. Maybe the very fact that the younger generation of meritocrats behaves this way demonstrates the point I'm arguing against - meritocrats are entitled assholes who believe they have a special right to rule and rule now, and consequently an impatience to overthrow the establishment and replace it with their own anti-establishment establishment.** But the complaint is not limited to younger meritocrats in any case.

Are our elites rotten? Well, as an elite myself (that's right, bow to me, minions!), I would say I am not rotten. It is true that I am not personally very empathetic, but I'm in the bottom half of my milieu with respect to such interpersonal skills. Most of the people who accuse the elite of being rotten are at least as elite as I am, if not more, and I'm sure they would say of themselves, "I am not rotten either!" So who's rotten? Well, not that woeful mass called the people, that's for sure. The long-suffering people. Who are they? Who knows? Anyone who's down and out at the moment, I guess, or who's given up trying to put on the appearance of dignity and order. Other people, but also my people, when that's convenient. The people are never entitled, arrogant assholes. The elites always are. Let's replace them with the people, or more specifically, the spokesmen of the people who first identified the problem with the elites. That will solve the problem. But here the problem is not specifically meritocracy, but rather the instability of democratic rule itself.

On a personal note, based on my acquaintance with a number of meritocrats, many of whom have political ideas that I think are foolish and sometimes nefarious, they are not by and large a mean or arrogant lot. I especially would not say that anyone I've met, whatever his other personal failings, believes that he is some kind of self-made hero, dependent on and obliged to no one. That particular claim about meritocracy - that meritocrats are at an individual level deeply self-satisfied about their achievements - has always struck me as entirely wrong. They seem on the contrary to be deeply insecure and anxious. Look at the acknowledgments sections of books and articles and - dear God - PhD dissertations. These people thank everyone they've ever met for helping them along the way! Pages and pages of acknowledgments! Sometimes you think, ok this is actually just a brag sheet to demonstrate how many famous people you know, but most of them are not famous at all. They're like, "Thanks to my girlfriend's sister's dog for cuddling with me during those cold, lonely January nights when I was thinking of giving up on everything." This is superficial evidence, sure, but the deeper evidence is only available through personal interaction.

Perhaps this does not harmonize with your perceptions?

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*It is worth noting that the criticism of managerial liberals from the left is undertaken entirely by meritocrats on behalf of meritocrats, socialists with high SATs.

**It is also worth noting that most of the arguments against meritocracy in the past 20 years have come from its own products. Pointy heads butting into each other. Maybe that makes it all the more damning, and that's often how these people frame it. "I was there! I saw with mine own eyes the terrible, terrible corruption! The debauchery! The delinquency! The people who didn't invite me to their parties! Reader, it's so much worse than you, as an ignorant outsider, could ever have imagined!" I always wonder how this logic works, b/c it seems to be self-discrediting. That is, if, as the claim of anti-meritocratic meritocrats goes, the modus operandi of the meritocracy is to find a million secret ways to perpetuate the class privilege and position of the elites, then isn't any denunciation of it from within its ranks always ultimately another form of perpetuation and self-aggrandizement? Or is the hope of this kind of criticism that, when the revolution comes for all the other Yalies, you will be the sole Yalie spared and even elevated to the leadership of the insurrection? Because, you know, they're probably gonna need someone really smart at the top to get things done.

Thursday, June 13, 2019

Andrew Stevens promises to fix your finances for free

Andrew Stevens offers to fix our financial problems. Here is his advice, copied from the comments of the previous post. His advice contains two #5's, so maybe we should worry about how good he actually is with numbers. But, you know, it's free. So ask him anything.
Oh, I'd need way more information than is on your tax returns. I'd also want to know wealth level, investments, monthly budgeting, and so on. But I understand that some people are more comfortable sharing that information than others. I'm very frank about it myself, but if you said, "Yeah, but that's because you're bragging," I won't disagree with you. I'm a generalist. I joke that, intellectually, I am the second best person I know at virtually everything (with some specialist I know ranking first). But on personal finance, I yield to no one.

By the way, my one objection to The Two Income Trap, which I read and thought was excellent back when it came out, was her section on housing. She completely ignored that most of the real increase in housing prices came about because houses are bigger, not because of a hypothetical "bidding war." I don't know if she obscured that to make her argument or if she genuinely didn't know it. Otherwise, most of what she said was spot on.

I can give you my specific priority list on what to do with "extra" money. This won't help you if you don't have extra money though. To help with that, I'd really need to see your budget. Even then I wouldn't be coming for your lattes. The "latte factor" people will say, "Hey, that adds up." And it does, but it doesn't add up to a lot really. Hell, back when I was poor, I smoked cigarettes which is a terribly expensive habit when you're poor. It never mattered much though. A little luxury like that isn't a big deal so long as you don't have a dozen of them.

So here's my priority list:

1) Obviously fund your 401k (or whatever) up to get the full company match. This is almost non-negotiable. It's free money, usually an amazingly good return. So I'm really tempted to put it even ahead of credit card debt.

2) Pay off your credit cards. While I like Dave Ramsey and I do think his "debt snowball" idea is good psychology, I can't recommend it because it's terrible math. Always pay off your highest interest rate first. Again, this step is obvious.

3) If you have an HSA, fund it annually with your expected annual medical expenses. This is not as important as it seems because you can "catch up" and still get the tax breaks so long as the medical expense is incurred while you had the HSA. I.e. I have frequently paid a medical bill out-of-pocket and then reimbursed myself with later contributions from my HSA. This even applies if it's a later calendar year. So don't fund your HSA with more than your expected annual medical expenses. At least not at this step.

4) Have a contingency emergency fund for one to six months' worth of normal expenses. I get made fun of for this because I do have quite a bit in very liquid investments (about half in a high-interest savings account and about half in CDs) - more than a year's worth of ordinary expenses. I agree that this exerts a cash drag on my portfolio, and I could use my IRAs, etc., as an emergency fund instead. But I just don't care for that idea; any money you pull out of an IRA is money that you can't put back since there's an annual contribution cap. I do draw this money down to, for example, make investments in my ESPP (more accurately, I live off of it while my paychecks fund my ESPP).

5) Now is the time to determine if you're on track for retirement. A lot of people are just by funding their Defined Contribution plan to get the full match. However, I do fund an IRA all the way up to the legal maximum (both for my wife and myself) every year. I recommend an IRA before extra contributions to your Defined Contribution plan (i.e. contributions which will not receive a full match) because an IRA will give you more investment flexibility. Extra contributions to your Defined Contribution plan might be recommended here if you're not on track for retirement with the full match on your Defined Contribution plan, whatever Defined Benefit plan you might have, anticipated Social Security, and so forth.

5) In general, I do think parents should help pay for their kids' college, but it's definitely below retirement on the list. Your kids can take out loans (hopefully not too much! also, never cosign for them!) to fund college, but nobody is going to give you a loan to fund your retirement. I'm in Iowa which has an incredibly generous 529 plan, last time I checked the best in the nation. You should look into your own state's 529 plan and compare with what you can get as an out-of-stater in Iowa or some other state with a great plan. (There are benefits to Iowa such as double tax breaks on state income tax which you can only get as a resident.) If you want to know how much you should save for your kids' college in it, I can't help you. It's guesswork for me with my own kid.

6) If you've made it this far, you're doing great. Your options now include early payment of your mortgage or college loans if you have them, funding your HSA for anticipated future medical expenses, investment in taxable accounts, and so forth. It doesn't really matter what you choose here and I'd leave it up to personal preference.

7) Start enjoying your money. You've earned it.
Ok, I will begin. First question: it sounds like I can't enjoy my money until I am too old to enjoy my money. Right now, we spend relatively a lot on travel (compounded by the costs of traveling with kids, since we have to take them). Our argument for this is that if we wait until our kids are grown and we are more financially stable, we risk not being in good enough shape to really enjoy our travels. Thoughts, Andrew? I have other questions too, but let's start there.

Monday, June 10, 2019

Divisions of labor, redux

I will assert that this essay is a total vindication of my earlier point. I don't know who this woman is, but she sounds completely right. Ok, then. On with your day.

Conjuring elite-dom

I think this would be an obvious point, but let's make it just in case no one else has yet: you can't just will elite status onto something you create. I'm all for starting new schools, universities, etc. You have some new idea for higher ed, or even an old one that you want to see proliferate, and you have the money to get the thing started - great! Nor do I think this is strategically as bad an idea as some conservatives have argued, since it would just be one of many different kinds of efforts to bring conservative scholars into the academy. But just because you make it doesn't mean anyone else will respect it. Especially when your standards for "what counts" as elite are extremely high - eg, "Harvard, Yale, Princeton, Stanford, and Berkeley—the universities that really count in American higher education." (My university does not count. Sad!)

How does a regular thing become an elite thing? I would like to know, too. It depends on the whims of fashion and public opinion, and no one really controls that. Even when you can kind of understand something's rise in retrospect, you can't conjure it or even predict it very well in the present. For example, it's a common belief that institutional age = prestige. People seem to think this b/c Harvard and Yale are old and prestigious. But the College of William and Mary is the second-oldest college in America, yet nowhere near the second-most prestigious. Or maybe you need to be a selective private institution offering only a rarefied liberal arts curriculum. But then, Berkeley? There is no simple formula. One would think that a self-proclaimed conservative university founded in the 2020s, however, would have a particularly steep course to prestige given how averse fashion, and especially the fashion of the young, currently is to conservatism. If a college like Hillsdale, which has age and history going for it, can't be taken seriously by mainstream Americans, why would an almost identical institution invented yesterday be?