July 11, 2009

The Economist: California v. Texas

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

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

Do keep in mind that California was much more impacted by immigration over the last generation than Texas: in the 2000 Census, 26% of California's residents were foreign-born versus only 14% of Texas's.
AMERICA’S recent history has been a relentless tilt to the West—of people, ideas, commerce and even political power. California and Texas, the nation’s two biggest states, are the twin poles of the West, but very different ones. For most of the 20th century the home of Silicon Valley and Hollywood has been the brainier, sexier, trendier of the two: its suburbs and freeways, its fads and foibles, its marvellous miscegenation have spread around the world. Texas, once a part of the Confederacy, has trailed behind: its cliché has been a conservative Christian in cowboy boots, much like a certain recent president. But twins can change places. Is that happening now?

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

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

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

Why is it surprising that the state with the nicest climate and the state with the second nicest climate have the highest and second highest state income taxes? California's income taxes are intended to exploit people willing to pay heavily to live in California. For example, golfer Freddie Couples lives in Santa Barbara because he can afford to live anywhere. In contrast, a skinflint like Tiger Woods officially moved from his native California to income-tax free Florida on the day he turned pro in 1996 to evade the California income tax.
Indeed, high taxes, coupled with intrusive regulation of business and greenery taken to silly extremes, have gradually strangled what was once America’s most dynamic state economy. Chief Executive magazine, to take just one example, has ranked California the very worst state to do business in for each of the past four years.

By contrast, Texas was the best state in that poll. It has coped well with the recession, with an unemployment rate two points below the national average and one of the lowest rates of housing repossession. In part this is because Texan banks, hard hit in the last property bust, did not overexpand this time. But as our special report this week explains, Texas also clearly offers a different model, based on small government. It has no state capital-gains or income tax, and a business-friendly and immigrant-tolerant attitude.
... And as happens to fashionable places, some erstwhile weaknesses now seem strengths (flat, ugly countryside makes it easier for Dallas-Fort Worth to expand than mountain-and-sea-locked LA ...

That's connection between topography, home prices, and politics is straight out of my stuff.
Texas also gets on better with Mexico than California does.

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

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

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

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

So, the political dynasties of Mexico and Texas, such as the Salinases and the Bushes, are quite friendly with each other, while Mexican political corruption in California is largely home-brewed.
American conservatives have seized on this reversal of fortune: Arthur Laffer, a Reaganite economist, hails the Texan model over the Gipper’s now hopelessly leftish home. Despite all this, it still seems too early to cede America’s future to the Lone Star state. To begin with, that lean Texan model has its own problems. It has not invested enough in education, and many experts rightly worry about a “lost generation” of mostly Hispanic Texans with insufficient skills for the demands of the knowledge economy.

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

In general, Mexican-Americans appear to thrive more in a cultural and economically conservative Republican state. Liberal policies, in contrast, works best in a high IQ / highly cooperative state with few NAMs, such as Minnesota.
Now immigration is likely to reconvert Texas from Republican red to Democratic blue; Latinos may justly demand a bigger, more “Californian” state to educate them and provide them with decent health care. But Texas could then end up with the same over-empowered public-sector unions who have helped wreck government in California.

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

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

Female Journalism

The Washington Post has a long article about "colorism" and Michael Jackson by DeNeen L. Brown.
Through the Past, Darkly
The Legacy of Colorism Reflects Wounds of Racism That Are More Than Skin-Deep...

Here's an interesting (although hardly unexpected) factual excerpt:
The most provocative research, he says, is related to marriage. Among black women younger than 30, there is "a premium associated with light-skinned complexion," Hamilton says.

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

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

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

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

The goal of the Sotomayor hearings ...

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

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

July 10, 2009

On VDARE.com: My questions for Sotomayor

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

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

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

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

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

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

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

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

July 9, 2009

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

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

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

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

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

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

Panhandling

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


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

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

July 8, 2009

Our long national nightmare is almost over

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

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

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

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

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

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

In this long interview in the New York Times, Bazelon asks Ginsburg the kind of fearless, hard-hitting questions you'd expect from her, such as:
Q: Can I bring up the Ricci case, brought by the New Haven firefighters?

In her unintentionally revealing way, though, Bazelon does allow us to get an eye-opening view of Judge Ginsburg's judicial philosophy, which, to summarize the interview, would appear to consist primarily of:
Q. Who?
A. Women!
Q. Whom?
A. Men!

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

A surprisingly sophisticated GOP report on the Mortgage Meltdown

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

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

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

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

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

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

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

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

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

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

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

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

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

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

As Henry Canaday has pointed out, it's not a coincidence that the financial system blew a gasket at exactly the place where the most political and cultural pressure was exerted: mortgages for minority and lower income households.
Risky mortgage lending, particularly loans with very low down payments, contributed directly to the rise of a housing bubble. Had this risky lending been contained within the low-income segment of the market targeted by politicians advocating more “innovation” in “affordable lending,” the damage to the wider economy might have been minimal. ...

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

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

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

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

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

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

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

All this raises the usual problems of disentangling cause-and-effect in history. A Fannie-centric view of what went wrong runs into the problem that Fannie and Freddie were hamstrung in 2003 and 2004 by exposure of their giant stock manipulation scandals. As the GOP report explains:
In 2003, Fannie Mae and Freddie Mac were at the height of their power. They dominated the secondary mortgage market, including a combined exposure of $372 billion to subprime mortgages made to borrowers with FICO scores below 660, 81 percent of the total market. Wall Street firms were responsible for a mere 19 percent of this market. However, accounting scandals were about to hammer the GSEs’ share prices, threaten their market share, and create an urgent need for a pro-active political influence strategy to blunt calls for reform.

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

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

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

Then, in 2005-2006, the most idiotic years for lending, the revitalized GSE's fought back against their declining market shares and poured zillions into bad mortgages. The report notes:
In response, Fannie Mae and Freddie Mac sought protection from their strongest political protectors, the advocates of high-risk affordable lending. The GSEs essentially doubled down on risky low down payment lending to shore up support on Capitol Hill and fend off attempted regulation. GSE congressional supporters, many of whom sat on key committees charged with oversight of the housing and mortgage industries, made repeated public statements in support of the push to reduce the quality of underwriting at the GSEs and to block congressional efforts at better regulation.

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

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

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

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

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

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

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

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

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

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

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

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

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

My Taki column: Good Cop Movie, Bad Cop Movie

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

Read it there and comment upon it here.

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

July 7, 2009

Amnesty: Our betters are back at it

The Washington Post reports:

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

"The continued failure to devise and implement a sound and sustainable immigration policy threatens to weaken America's economy, to jeopardize its diplomacy, and to imperil its national security," concluded an independent Council on Foreign Relations panel, co-chaired by former Florida governor Jeb Bush (R) and former Clinton White House chief of staff Thomas V. "Mack" McLarty III....

The panel also recommended "earned legalization, not amnesty" for an estimated 12 million illegal immigrants now living in the United States, requiring those who wish to stay to work, pay taxes, learn English, pass background checks, pay fines and wait their turn behind legal immigrants. ...

Edward Alden, the task force's director and a CFR fellow, said the involvement of Bush, a prominent national Republican and the brother of former president George W. Bush, and McLarty, a Democrat and senior international fellow at the U.S. Chamber of Commerce, was intended to create political space for centrists in both parties.

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

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

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

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

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

President disses Vice President

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

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

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

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

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

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

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

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

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

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

Barry Is Back

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

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

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

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

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

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

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

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

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

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

We're in Deep State

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

The collective message of all of this — the AIG bailout, the swift approval for its bank-holding conversion, the TARP funds — is that when it comes to Goldman Sachs, there isn't a free market at all. The government might let other players on the market die, but it simply will not allow Goldman to fail under any circumstances. Its edge in the market has suddenly become an open declaration of supreme privilege. "In the past it was an implicit advantage," says Simon Johnson, an economics professor at MIT and former official at the International Monetary Fund, who compares the bailout to the crony capitalism he has seen in Third World countries. "Now it's more of an explicit advantage." ...

Fast-forward to today. It's early June in Washington, D.C. Barack Obama, a popular young politician whose leading private campaign donor was an investment bank called Goldman Sachs — its employees paid some $981,000 to his campaign — sits in the White House. Having seamlessly navigated the political minefield of the bailout era, Goldman is once again back to its old business, scouting out loopholes in a new government-created market with the aid of a new set of alumni occupying key government jobs.

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


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

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

The basic story is one of predatory securitizing. It took Cassano over a year to realize that the mortgage-backed securities he was insuring had shifted in composition between 2003 and 2005 from only slightly subprime to heavily subprime.
[AIG executive Gene Park] suspected Joe Cassano didn't understand what he had done, but even so Park was shocked by the magnitude of the misunderstanding: these piles of consumer loans were now 95 percent U.S. subprime mortgages. Park then conducted a little survey, asking the people around A.I.G. F.P. most directly involved in insuring them how much subprime was in them. He asked Gary Gorton, a Yale professor who had helped build the model Cassano used to price the credit-default swaps. Gorton guessed that the piles were no more than 10 percent subprime. he asked a risk analyst in London, who guessed 20 percent. ...

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

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

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

It still isn't.

Cassano finally admitted this was nuts in 2006, but he didn't try to get out of previous bets on subprimes, he just stopped taking new ones. But, after AIG got out of the game, the investment banks turned out to be willing to hold subprime MBSs unhedged:
The big Wall Street firms solved the problem by taking the risk themselves. The hundreds of billions of dollars in subprime losses suffered by Merrill Lynch, Morgan Stanley, Lehman Brothers, Bear Stearns, and the others were hundreds of billions in losses that might otherwise have been suffered by AIG F.P. Unwilling to take the risk of subprime mortgage bonds in 2004 and 2005 [or, less willing than AIG was], the Wall Street firms swallowed the risk in 2006 and 2007. ... A.I.G. F.P. wasn't an aberration; what happened at A.I.G. F.P. could have happened anywhere on Wall Street ... and did.

When the world finally woke up in the summer of 2007,
The subsequent race by big Wall street banks to obtain billions in collater from A.I.G. was an upmarket version of a run on the bank. Goldman Sachs was the first to the door, with shockingly low prices for subprime-mortgage bonds ... A.I.G. couldn't afford to pay Goldman off in March 2008, but that was O.K. The U.S. Treasury, led by the former head of Goldman Sachs, Hank Paulson, agreed to make good on A.I.G.'s gambling debts. One hundred cents on the dollar.

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

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

July 6, 2009

Sarah Palin

The unmentionable issue regarding Palin is that a 45 year old woman with five children hasn’t had time to think through all the national and international issues a President needs to have thought about. Her five children have taken up too much of her attention. In contrast, Margaret Thatcher once told my wife that she was glad she had had fraternal twins so she could get having babies over and done with and get back to work.

If Palin were a man, there’d be a wife to deal with the kids, so the Governor could get back to thinking about about non-family, non-local topics.

This is all totally obvious, but nobody is supposed to mention stuff like this anymore.

By the way, 67-year-old genius Vice-President Joe Biden got off message on a talk show yesterday and basically told Israel it's okay to bomb Iran.

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

Easy offers

Prominent man of letters Walter Kirn writes an essay in the New York Times Magazine "Life, Liberty and the Pursuit of Aptitude," in which he explains (to the extent that "explain" can be used to characterize his effort):

1. He wants you to know that he got very high SAT scores, which helped get him into Princeton
2. But he's not all stuck up over it; in fact, he says he's really not that smart
3. Women of Color worked much harder at Princeton than he did
4. So, Sonia Sotomayor was right about Ricci
5. Now that he's long graduated from Princeton, he sort of thinks that his place should have been given to "another Sotomayor."
6. Walter Kirn, a frequent contributor, is the author, most recently, of “Lost in the Meritocracy: The Undereducation of an Overachiever.”

It's always fun to learn about people on Wikipedia. One thing you learn is that it's easier to theoretically give up in the name of diversity privileges you got in the past than to give up in actuality privileges you are getting in the present. Wikipedia reports that Kirn has two academic jobs that no doubt he could have foresworn so that "another Sotomayor" could have had them instead of him, but, for some reason, he didn't:
In addition to teaching nonfiction writing at the University of Montana, Kirn was the 2008-09 Vare Nonfiction Writer in Residence at the University of Chicago.

Kirn, who has published seven books (two of them have been filmed), appears to have had something going for himself besides just his SAT scores:
Kirn married Maggie McGuane, a model and the daughter of actress Margot Kidder and novelist Thomas McGuane, in 1995. Kirn was 32 at the time; McGuane was 19.

Margot Kidder, who played Lois Lane in the original "Superman," was one of the great beauties of the 1970s. She was married from 1975 to 1976 to the then-promising novelist Thomas McGuane during his "Captain Berserko" phase as a Hollywood screenwriter and director (92 in the Shade). Glamorous in-laws, but perhaps not the most stable ones: Kirn's ex-wife writes in the current Vogue:
Nor did I have role models of frugality to draw on: My mother, who raised me with both an excess of funds and socialist-leaning ideals [one of her mother's boyfriends was Pierre Trudeau], likes to joke that she considers wealth the way most view bacterial infections—to be gotten rid of, before it has a chance to grow.

Apparently, the Kirn-McGuane marriage didn't end all that amicably. The New York Observer reports:
Mr. [Jay Bright Lights Big City] McInerney was standing with Maggie McGuane, the daughter of acclaimed writer and legendary partier Thomas McGuane. ... Mr. McGuane’s daughter said her father considered his drinking days “invisible—never happened.” She used to be married to the writer Walter Kirn. “He used to be a big drinker, but now he’s a teetotaler, too,” said Ms. McGuane, who resides in Montana and works as a journalist. “If I had any message, it would be ‘Beware of the teetotaler.’ Because they’re absolutists, and they can be a little dangerous.”

It turns out that Kirn might be a little personally biased about the Ricci white firefighter case, since, judging by Jezebel's brusque summary of Maggie McGuane's 2007 article in Vogue about how her boyfriend's son is enlisting in the military, his ex-wife may have cuckolded him with a white firefighter:
The things you learn when you divorce your raging a****** literati husband to marry a firefighter! The story goes on to talk about how sometimes we forget that there are actually white people in the military with moms who take yoga and everything, and that firefighters don't necessarily think it's a stupid idea for their sons to enlist in the army which can be a BIG turn-off if you are a wealthy writerly type who is married to one. (Quote: "Our once fiery romance grew closer in temperature to Haagen-Dazs.") But then when Maggie's brawny new fireman husband watches his son go to Kentucky and thinks about maybe what it would be like if he replaced "Kentucky" with "Ramadi" he too realizes Operation Iraqi Freedom was a bad idea, just like she was telling him all along, and even starts to attend peace protests, so it's really okay that rich people don't have to shoulder as much of the burden as poor people because if poor people didn't lose so many lives in wars they wouldn't realize how f*****-up American foreign policy is, which rich people know about just by reading erudite publications such as Vogue.

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

July 5, 2009

WWTDD on the Michael Jackson Memorial

The Washington Post reports:

Like a modern-day Willy Wonka tale, more than 1.6 million fans waited to learn Sunday whether they were among the lucky few to win access to Michael Jackson's memorial service Tuesday at Staples Center.

On Sunday evening, fans around the world started posting Twitter messages about receiving tickets.

"OMG OMG OMG OMG i got tickets to the Michael Jackson memorial service!!!"

A few days ago, What Would Tyler Durden Do had a Kornbluthian suggestion about what to do with the lucky winners:
If LA wants to clean itself up, they should wait for all 30,000 people to show up and then just lock the doors. It’s not gonna be the team behind the Large Hadron Collider. It’s gonna be Billy Bush and Mary Hart and Joe Jackson and 800 lawyers and an army of delusional retards who the only thing they had to take time off from was clogging up 911 with calls about “that bitch is crazy, you needa arrest her ass.” They should lock the doors, and then it turns out [the fans had] actually climbed aboard a rocket.

And then just shoot that thing right into the Sun.

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

All-Star Break

With baseball's All-Star game coming up and Dominican star Manny Ramirez back from his 50 game suspension for steroids, here's the full-length version of my review from The American Conservative of the film "Sugar:"
“Sugar” is a critically acclaimed indie film about a 20-year-old Dominican pitcher’s minor league baseball season in Iowa. “Half Nelson,” the last collaboration of its married auteurs, Anna Boden and Ryan Fleck, brought Ryan Gosling a Best Actor nomination as a caring white liberal teacher in a Brooklyn slum school attended by African-Americans and Dominicans. Because numerous Dominican immigrants in New York City are failed minor leaguers, “Sugar” was a logical next film for the pair.

This movie is about a black Dominican, but it was very much made for white Americans. Indeed, “Sugar” exemplifies Sundance movies. It’s so sensitive, subtle, soft-spoken, averse to crowd-pleasing gimmicks, and generally beholden to the Stuff White People Like rulebook that few ballplayers of any nationality would pay to see it. Dodger slugger Manny Ramirez would snore so loudly through it that the audience couldn’t hear the soundtrack’s climactic song: Leonard Cohen’s Hallelujah sung in Spanish.

Boden and Fleck wanted not a tale of triumph, but a statistically representative illustration of the typical Dominican athlete’s brief career. We see the young pitcher Sugar (portrayed by Algenis Perez Soto, an amateur second baseman who visibly can’t throw his character’s supposed 95 mph fastball) at the Kansas City organization’s training academy in the baseball-mad small city of San Pedro de Macorís (birthplace of 73 major league players, including Sammy Sosa). We follow him to spring training in Phoenix, then to Single A ball in Iowa. There, he’s lonely because there are no Spanish-speaking girls to chat up. After an injury, he’s demoted to the bullpen. His pride too wounded to return home, he quits the team and hops a bus to the South Bronx, where he pursues a career in illegal immigration.

Although most Dominicans (such as the American-born Alex Rodriguez) are some shade of beige, San Pedro ballplayers tend to be descended from black Jamaicans brought in to chop sugar cane. Last year, the 88 Dominicans made up almost 12 percent of major league rosters, despite the Dominican Republic having only three percent of America’s population. The average major league salary is approaching $3 million, so Dominican big leaguers earn around a quarter of a billion dollars annually.

The young ballplayer claims he’s nicknamed “Sugar” because he’s “so sweet with the ladies,” but Boden and Fleck want their film’s title to convey that by signing so many Dominican teens, baseball teams are, like sugar companies, neocolonialist exploiters. To the filmmakers, American ballclubs are to blame both for exploiting Dominicans and for not exploiting African Americans. Fleck complains that the black American share “has gone down to somewhere around 8 or 9 percent now, while the Dominican population in baseball has risen dramatically. Major League Baseball has taken money out of the inner cities … and flipped it into the Dominican Republic, where they can sign players much cheaper.” In the Sundance worldview, whatever happens is white people’s fault; blacks can’t make choices for themselves.

In reality, while MLB teams would love to employ verbally charismatic African Americans instead of tongue-tied Spanish speakers, black American kids these days mostly consider baseball boring. The Dominican Republic represents one of the few sizable concentrations of fast and strong youths of West African descent who find baseball more fascinating than basketball, soccer, or cricket. (Also, steroids can be bought legally without a prescription in Dominican pharmacies.)

The real scandal is that big league baseball has facilitated the illegal immigration of tens of thousands of washed-up uneducated jocks. MLB privatizes profits and socializes costs.

The irony in this trend of dramas striving to be “more documentary-like” is that the best documentaries are far more satisfyingly dramatic than “Sugar.” For example, Werner Herzog’s popular documentary “Grizzly Man” culminates with the annoying protagonist being devoured by a bear. Documentaries that follow somebody as ho-hum as Sugar are unlikely to get widely distributed or even finished.

Boden and Fleck are garnering critical kudos for refusing to create an intriguing plot. Yet, they didn’t have to redo “Rocky” They could have, say, made the kid not a 20-year-old prospect but an 18-year-old prodigy. Once the audience is rooting for him, they could then have yanked the rug out by revealing that the phenom’s agent, like previous Dominican talent hustlers (such as, ironically enough, their own technical advisor, ex-Cincinnati Red Jose Rijo), had defrauded the Americans: the sensation’s not 18, he’s really 22, with just a journeyman’s natural talent. Now, that would be a story.

Rated R for language, some sexuality, and brief drug use.

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

Why the Ricci case is the exception instead of the rule

Here's an old column I wrote in for Taki's Magazine on May 20, 2009, that I forgot to post a link to because I was traveling:

Following up on Jared Taylor’s article, the Ricci reverse discrimination lawsuit now before the Supreme Court is not one of those “hard cases” about which law students are warned. There is nothing anomalous about the discrimination against the New Haven firemen ...

Instead, what’s unusual is that we’re even hearing about the victimization of these unprotected majorities.

I suspect that’s largely because Frank Ricci and his friends are firemen. Firefighters show up more than any other profession in prominent reverse discrimination suits, perhaps because they enjoy civil service protection, unions, and, most of all, public admiration.

In a culture that increasingly holds blue-collar workers in contempt, firemen are the exception to the rule. They risk their lives for you, and they don’t give you speeding tickets. As the cops in Joseph Wambaugh’s LAPD novels are always telling each other: If you really wanted people to like you, you should have been a fireman.

It’s worth exploring some of the more subtle game theory reasons why there is so little public outcry against discrimination against white males other than firefighters. Why is Ricci close to being the exception that proves the rule?

First, affirmative action targets marginal white males.

For example, although white guys who are already firemen have a fighting chance of staving off unfair treatment in promotions, white guys who just want to become firemen are discriminated against in hiring with impunity. ...

Cheating an already employed white fireman out of a promotion is dicey because he doesn’t go away. He’s still a fireman. So he hangs around, he complains, he organizes other white firemen to complain to their aldermen about why the politicians aren’t releasing the results, maybe he talks his sister-in-law’s cousin who is a file clerk in Personnel into Xeroxing the secret results of the test and leaking it to him. And then he hires a lawyer.

In contrast, cheating some random white guy off the street out of his lifelong dream of becoming a fireman is a piece of cake: “Don’t call us, we’ll call you.” What can this marginal man do about his suspicions? Not much. He’s not connected.

Moreover, announcing that you are a victim of racial preferences is normally to admit you are marginal, that you would have only barely made the cut anyway. How uncool is that? [Notice that the New Haven plaintiffs were all the top scorers, because the entire test got ham-handedly thrown out. If the New Haven politicians had been subtler, more expert in their racial discriminating, they would have victimized just the marginal white scorers.]

Similarly, affirmative action, by definition, doesn’t impact those who made the cut. Consider Harvard students. While some freshmen may enter Harvard sore that affirmative action might have cost high school friends admission to Harvard, soon they have lots of swell new friends, who, unsurprisingly, are all Harvard students, unlike those losers they used to hang around with in high school who didn’t have what it takes to get into Harvard.

Hence, you don’t see a lot of solidarity in opposing affirmative action.


Read the whole thing there and comment upon it here.

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